These trusts allow you to fast-track the transfer of property after death without having to deal with the probate court system in your state. Done properly, the transactions are all handled privately and you have significant leeway to decide exactly when and how you want these transfers of assets to be accomplished. Done improperly, you could have a disaster on your hands. The creator of a revocable living trust is typically referred to as the “grantor,” and in most cases the grantor will also serve as trustee, managing the trust and the assets it holds. The grantor can name a “successor trustee” to take over management of the trust should the grantor ever become incapacitated and unable to manage it personally. The successor trustee would also step in at the time of the grantor’s death to transfer the assets to the trust’s named beneficiaries. This process occurs without the need for probate because the trust itself hasn’t died and it holds ownership of this property. The grantor can “undo” or dissolve a revocable living trust at any time, thus the name. Ideally, your trust’s formation documents should state who gets your assets and when, and how the transfer of assets to your beneficiaries should take place. Planning for all this will most likely require more than checking off a few boxes on preprinted forms. Everyone’s estate planning needs are different. What works for you and your family will most likely not be the same as the needs of your sister, your parents, or your next-door neighbor. Computer software isn’t really designed to accommodate these differences or any of your unique concerns. For example, one couple who had completed a revocable living trust using a well-known estate-planning software program lived in Florida, but the software-generated trust agreement software stated up front that it was governed by Nevada law. They missed that. Florida is a separate property state while Nevada is a community property state, and this completely turned the couple’s trust into a nightmare to administer. The living trust form that was generated ended up being totally inappropriate for their particular situation. Then there are the legal formalities required to write and sign a valid trust agreement. Many state-specific issues can affect a trust, including the definition of descendants, anti-lapse statutes, homestead rights, common law marriages, putative spouses, and elective share laws. It’s unlikely that a generic trust form not dedicated to a particular state could properly address all these specific state law issues, although you can sometimes purchase forms that comply to a particular state’s laws. “The information contained in this book or program is not legal advice and is not a substitute for legal advice. For legal advice, consult with an attorney.” The attorney you choose should be local as well, because you’re still dealing with all those unique state laws. Each state can also have somewhat different rules and requirements for signing the trust documents, for having them notarized, and for witnesses to the signing. Your entire trust can be invalidated if you don’t comply. Your trust’s terms won’t be honored and, ultimately, your estate will have to pass through probate. Funding your trust with these assets will require that additional documents be drawn up, so creating a trust is not simply a matter of drawing up one form. For example, a new deed would be required to transfer real estate, and that deed must be filed and be on record somewhere according to your state’s laws. This might all be more than you can handle yourself.
