A living trust is a created legal entity, separate from the person who it is created for, called the trustee. The living trust takes legal ownership of the assets that are put into the trust. The trustee controls the assets during their lifetime. Like a will, the living trust will contain instructions on how property is to be distributed after the trustee’s death. A successor trustee is named, who will handle the distribution to the beneficiaries (the people or organizations who will receive the assets). This transfer of property will be handled outside of probate court, saving money, time and inconvenience, which is why a simple revocable living trust is created.
When real property is to be placed into the living trust, a new deed will be prepared granting the property to the living trust. It is necessary for the deed to be recorded at the county recorder in the county that the real estate is located.
Other documents are usually prepared at the same time for the benefit of the trustee. These include a certification, a pour over will, a power of attorney and an advance healthcare directive. The certification is a summary of the trust and it is for someone who needs proof of certain facts, without the need to see all the details. Oftentimes a bank will ask to see the certification if a house is being re-financed or sold.
A pour over will takes the rest of the trustee’s assets that were not specifically put into the trust when it was created, so that those other assets can also be distributed according to the terms of the living trust.
The power of attorney and advance healthcare directive are only valid when the trustee is alive. Together they avoid the need for someone to file for a conservatorship if the trustee becomes incapacitated. Like a probate, a conservatorship is filed at court. It is expensive, time consuming and a headache. The power of attorney names an agent, who is normally the successor trustee, who will handle the financial & legal matters for the trustee, for the benefit of the trustee. The advance healthcare directive names an agent to communicate to the trustee’s doctor if the trustee is unable to. This document also specifies their wishes regarding end of life decisions. These documents are usually only effective when a trustee becomes incapacitated and only while they are incapacitated.
It’s important that all the documents are prepared completely and correctly to be effective. Just Document Preparation’s bonded and registered legal document assistants have been preparing living trusts since 1996. Call our team for current fees and timelines.