Planning for the future is rarely a comfortable topic. Not simply because it forces us to think about mortality and things beyond our control, but also because there’s an endless menu of legal options.
Should you write a will? Do you need a lawyer? How to find said specialists? Ultimately, choosing between them comes down to subjective needs and preferences, which could vary based on your family dynamics and goals. For those who want to spare their families some headaches, a living trust is often the best solution, providing a level of control and privacy that other documents don’t.
If you are ready to take this step, you might be wondering how to make a living trust, but here is some good news: you’re in the right place! This article will guide you through the process, ensuring your legacy is protected however you intend.
How to make a living trust: an overview of the process
So, how to make a living trust? While it involves legal documentation, the process itself follows a logical, step-by-step structure. Surprising no one, it starts with decision-making before any paperwork is signed, so let’s get right to it.
Step 1: determine your goals and type of trust
First, you must decide on the type of trust that suits your needs. The most common choice is a Revocable Living Trust. In this case, “revocable” means you maintain control – you can change the terms, add or remove assets, or even cancel the trust entirely during your lifetime.
In contrast, an Irrevocable Trust is generally permanent and is often used for specific tax benefits or asset protection from creditors, though it requires giving up control of the assets.
You also need to decide if this will be an Individual Trust (for just you) or a Joint Trust (typically for married couples).
Step 2: inventory your assets
A trust is like a safe – as it’s only useful if you know what to put inside – so take a comprehensive list of your significant assets. This includes real estate (your home, vacation properties), bank accounts, investment portfolios, valuable personal property (art, jewelry), and business interests. Knowing exactly what you own is crucial for the “funding” stage later on.
Step 3: choose your trustee
The Trustee is the person who manages the trust assets. With a revocable living trust, you are typically the primary trustee, meaning you keep full control over your property while you are alive and able.
However, the critical decision is choosing a Successor Trustee. This is the person (or institution) who will step in to manage your affairs if you pass away or become incapacitated.
For this step, you’ll do much better by choosing someone trustworthy and organized.
Step 4: designate beneficiaries
Finally, decide who gets what. Unlike a will, a trust allows for detailed instructions. You can state that beneficiaries receive assets immediately upon your death, or you can set conditions for specific assets.
For example, distributing funds only after they reach a certain age or achieve a specific milestone, like graduating from college.
Drafting and formalizing the trust document
Once the decisions are made, you need to create the legal document itself, known as the “trust instrument.” This document outlines all your rules, your appointed trustees, and your beneficiaries.
Creation options:
- DIY and online software: for individuals with simple estates and straightforward family situations, reputable online estate planning software is usually a cost-effective solution. However, you need to be cautious and ensure the service is specific to your state’s laws – double-check them after writing your first draft!
- Estate planning attorney: if you have a large estate, own a business, have a blended family, or have a beneficiary with special needs, hiring an attorney is the best way to go. They can help you navigate complex legal situations and nuances that software might miss.
On signing and notarization of living trusts
Regardless of how you draft the document, it is not valid until it is formally executed.
You must sign the trust document, and in most states, including Florida, notarization is required to make the living trust legally valid.
Just to freshen up your mind, notarization is a process through which a notary public verifies your identity and confirms that you are signing the document voluntarily and of sound mind. This official stamp is a safeguard against fraud and future legal challenges from disgruntled heirs.
You can learn more about the job of a notary public here.
Don’t forget to fund your living trust!
Creating the trust document is only half the battle. A surprisingly common mistake is signing the papers but failing to “fund” the trust, and one that holds no assets is essentially useless.
In this case, “funding the trust” means legally transferring the title of your assets from your individual name to the name of your trust.
- Real estate: for your home or other properties, you must sign and record a new deed (often a Quitclaim Deed or Warranty Deed) transferring the property from “John Doe” to “John Doe, Trustee of the John Doe Living Trust.”
- Financial accounts: you’ll need to visit your banks and brokerage firms to change the ownership of your accounts to the trust.
- Beneficiary designations: for assets like life insurance and retirement accounts, you may need to update the primary or secondary beneficiary to be your trust, though you should consult a tax professional before changing them to avoid unintended tax consequences.
As a safety net, it is also standard practice to create a “Pour-Over Will.” This simple will be a backup, stating that any assets you accidentally forgot to put into the trust should be “poured over” into the trust upon your death, ensuring they are distributed according to your trust’s plan (though these “caught” assets may still have to go through probate).
Why would I choose a living trust over a will?
Why go through this effort instead of just writing a will? The primary advantage is avoiding probate (a court-supervised process that verifies a will) because it’s public, often expensive, and can take months or even years to resolve. A living trust allows assets to pass directly to beneficiaries privately and quickly without court intervention.
Furthermore, a living trust offers incapacity planning. A will only goes into effect after you die, so it does nothing if you become ill or incapacitated. A living trust, however, allows your Successor Trustee to step in immediately and manage your assets for your care, avoiding the need for a court-appointed conservatorship.
Now you know how to make a living trust, from start to finish
Learning how to make a living trust is one of the most proactive steps you can take to protect your family and your assets. With an established, clear plan, you ensure that your legacy is preserved and that your loved ones are spared the stress and expense of probate court. Remember, however, that a trust is only effective if it is properly formalized and funded!
When you are ready to execute your trust documents, Mobile Notary Orlando is here to facilitate the final step. We offer professional mobile notary services, coming directly to your home, office, or any agreed-upon location to notarize whatever documents you need – we’ll be there for you.
Serving Orange, Seminole, Brevard, and Osceola counties, we ensure your estate plan is legally sound and ready to protect your future. We also offer a variety of document-related services! Contact us today to schedule your appointment with our experts.
