Living Trust FAQs
	What is a living trust? Do I need to set up separate record keeping for the living trust? Can I transfer property in and out of the trust while I am alive? Do I need an attorney to form a living trust? Do I still need a will if I set up a living trust? Can I include property in my trust on which I still owe money? Does a living trust avoid estate taxes? Can a living trust protect my assets from being used to cover catastrophic medical costs? When should you update a living trust? Can I make a loan from my trust to a beneficiary? What is a living trust? A trust allows you to gather together in one document all your significant property. This is important if you want to make sure that your property is distributed easily and quickly after your death. The trust, not you, owns that property. This doesn't mean that you no longer have control of your assets. Since you, the grantor, will usually appoint yourself as the trust's initial trustee, you still have complete control of your property. You can do what you want with that property - you can even transfer some property out of the trust or add property to it. Most importantly, a living trust allows you to provide for the quick and efficient distribution of your property to loved ones when you die. Do I need to set up separate record keeping for the living trust? No, as long as the grantor acts as the initial trustee of the trust. Can I transfer property in and out of the trust while I am alive? Yes. If you have an individual trust you can transfer property without getting anyone's consent. If you have a shared trust, you should get your co-trustee's consent when transferring jointly-owned property. Do I need an attorney to form a living trust? No, an attorney is not required in order to form a living trust. You can prepare the legal paperwork and file it yourself, or use a professional legal documentation service such as LegalZoom. However, if you have questions that you cannot resolve on your own, or if your estate will face significant taxation, or if you believe that your spouse or children may challenge your living trust, then you should definitely consult with a licensed attorney. Do I still need a will if I set up a living trust? Yes. A will acts as back up to deal with any property that is not included in the living trust, either because it was improperly transferred or acquired after the creation of the trust. A will also covers property that was intentionally left out of the trust (e.g. cars, personal checking accounts). The LegalZoom Living Trust includes a simple will for this purpose. Can I include property in my trust on which I still owe money? Yes. The most common example of such property is a house still subject to a mortgage. Your beneficiary will be responsible for that debt when he receives the property from the trust. If you want to structure your trust so that all debts will be paid from the trust upon your death you will need to consult an attorney. Does a living trust avoid estate taxes? Your estate is still vulnerable to estate taxes. It is important to remember, however, that there is no estate tax assessed on an estate worth less than $1,500,000 for a single person in 2005. In addition, an AB living trust may allow you to effectively double this exemption. Can a living trust protect my assets from being used to cover catastrophic medical costs? You should be aware that including a catastrophic illness clause in your trust cannot shield your assets adequately. If you are concerned about this you should consult an attorney. When should you update a living trust? You should change your trust by giving the trustee a signed, written amendment to the trust in the following situations: there is a change in your marital status the birth or adoption of a child you move to another state there is a significant change in your financial status one of your beneficiaries dies there is the death or incapacity of a named trustee. Can I make a loan from my trust to a beneficiary? Yes, as long as you provide for this power explicitly in your trust. You may make a loan, which the beneficiary must pay back with interest. You may allow the beneficiary to repay the loan with money the beneficiary would receive from the trust. In a similar vein, you can make it clear in the trust that the trustee can make payments for the benefit of a beneficiary (e.g. college tuition for a child). Point of origin credit for this file is given to LegalZoom.com, Inc., a registered and bonded legal document assistant, #0104, Los Angeles County. LegalZoom.com is not a law firm and is not a substitute for the advice of an attorney.