How To Make a Living Trust Without a Lawyer. Many people often ask, “How do I make a living trust without a lawyer?” For many Americans, a significant goal of estate planning is to avoid probate. A revocable living trust, unlike a will, offers a fast, private, and probate-free way to transfer one’s property after death.
How To Make a Living Trust Without a Lawyer
Although a living trust is not a complete substitute for a will (it doesn’t allow you to name a guardian for a child, for example), it is a more efficient way to transfer property at death, especially large-ticket items such as houses.
How To Make a Living Trust
To understand why most lawyers charge too much for a living trust and why it is safe to do it yourself, it helps to know that a living trust is about as easy to prepare as a will. Here are some steps to follow:
Determine What Type of Trust You Want to Create
If you are married, you should decide whether you want to create an individual or joint trust.
An individual trust includes only property, while a shared or joint trust includes all property that belongs to you and your spouse.
While you and your spouse can create two individual trusts, this can cause complications with shared assets. A joint trust, however, can dispose of both individual and shared property.
List Your Assets
Make a list of all your assets, including tangible items like houses, vacation properties, and cars. Do not forget the intangible assets like bank accounts, stocks, bonds, and life insurance policies. When you compile this list, you will get a better idea of what you need to manage and who you want to benefit from the property.
Gather Paperwork for Your Assets.
You will need information such as account numbers and location, find stock account information and certificates, deeds or titles to real property, and titles for automobiles, and transfer the title to your assets from yourself to the trust. You should also make sure that you have accurate information about your property in your trust documents.
Choose Your Beneficiaries
Your beneficiaries are the people or organizations you choose to receive the assets in your trust. When you pass away, your successor trustee will distribute the trust assets to your beneficiaries and close out the trust.
You can name beneficiaries for each of the trust’s assets. You can even name a nonprofit organization as a beneficiary! Just be sure to include the charity’s full name, business address, and Employer Identification Number (EIN). You can find a charity’s EIN by doing a quick internet search.
A trustee is a person who manages the assets in a trust. For revocable living trusts, many people choose to name themselves as trustees. If you do this, you should name a successor trustee in your trust document as well. Your successor trustee will take over managing your trust assets if you pass away or become incapacitated.
Establish The Identity and Responsibilities of The Trustee and Successor Trustee
If you’re using a form or sample as a guide, you can largely copy this language, but read through it and make sure you understand what it means.
. While you are alive, you are considered the trustee of your living trust. After you die, your successor trustee will take over and distribute your property to the people you’ve listed as beneficiaries.
. As a trustee, you have the same rights and abilities to use, transfer, or sell your property as you did before you created the trust. After you die, your successor trustee will manage and distribute that property to the beneficiaries you’ve named.
. Your successor trustee will be responsible for reporting any income earned from the trust assets and transferring property ownership from the trust to your listed beneficiaries.
List The Beneficiaries of The Trust
The trust’s beneficiaries are the people who will inherit the assets you place in the trust after you die. You can list the property separately in your declaration, or you can create a separate schedule of property and refer to that document. For example, you might write, “At the death of the grantor, the trustee shall distribute the trust property by Schedule A, attached.”
Create Your Schedule of Property
To list the property and assets included in the trust, write a separate document and attach it as a schedule to your declaration of trust. By creating a separate document, you can easily amend it later on without having to execute an entire declaration all over again. You can generally change the assets in your trust whenever you want.
If at any time you decide to take something out or acquire a new asset you want to add, just update your schedule and change the property ownership documents to reflect the trust.
Sign And Notarize The Trust Document
Most states require your signature and a notary endorsement before your trust is enforceable. You can find a notary public at your bank branch or in a print and mail store that offers notary services. You may want to sign and have notarized more than one copy of your trust, so you have multiple originals. That way, you can have an original copy for your records, and you can provide another original copy to your successor trustee.
Transfer Property into The Trust
Your trust isn’t finalized until you put the trust’s assets in the name of the trust. Typically, the property will still be in your name, but you must add language indicating that you are now holding it in trust. If real property is included in your trust, you will have to execute a new deed that includes the trustee language.
For example, your new titles or deeds might read, “Sally Sunshine, trustee of the Sally Sunshine Revocable Living Trust dated July 4, 2016.” Just use your name and the date you executed your trust. When you sign any documents related to the property, remember to add “trustee” after your signature.
Transfer Business Interests into The Trust
If you own a small business, you may consider placing it in a trust so it continues even after your death. For a sole proprietorship, name the business in the trust and transfer assets like other property types. If you are part of a partnership, you can only transfer your ownership interest in the trust.
That transfer requires modifying the partnership agreement, so the trust is with the partner, not you. For corporations, you need to cancel your original ownership certificate and have your board of directors issue a new one to the trust.
Store Your Living Trust Document
Once you complete the living trust document and transfer property, store it in a secure place, like a fireproof safe at home or a safe deposit box. Keep the certificates and titles (now with the trust as the owner) in the same place. Provide copies of the trust document to other trustees, successor trustees, and beneficiaries.
Draft Supplemental Documentation
Even if you draft a living trust, you still need a last will to transfer property outside the trust, handle any excess not addressed in the trust, or designate a guardian for your minor children. You can find will forms online or ask an estate planning lawyer to draft one in addition to the trust. You can also consider other documents for your estate plan, like living wills, health care powers of attorney, durable powers of attorney, or advance directives.
Apply For an Employer Identification Number (EIN).
An EIN is necessary to file a tax return for the trust. Although the IRS doesn’t require you to file a separate tax return for your trust while you are still alive, a tax return may be required after your death if you have assets in the trust that earn income. Since you can get an EIN relatively easily for free, it’s easiest to just go ahead and do it ahead of time rather than leave it for your successor trustee to do. You can apply for an EIN online.
When To Use a Lawyer
If it’s this easy, why not do it yourself? Many people do, quite successfully. But consider hiring a lawyer if you have questions about your particular situation or a thorny estate planning issue that a basic living trust just doesn’t address. For example, you will want to consult a lawyer if:
. You have a lot of debts.
. You’re not sure what you own.
. Don’t have someone you trust to name a successor trustee.
. You want to place conditions on your gifts (such as giving money to your nephew only if they graduate from college).
. If you anticipate family conflict over your gifts.
. You live abroad, own a property abroad, or
. You might owe estate taxes.
But even if you do go the lawyer route, it’s worth doing a little research on your own; it’s a lot more cost-efficient than paying a professional to educate you about the basics.
Frequently Asked Questions
What Goes into a Trust
Once you decide who you want to be involved in your trust, you have to choose the assets that will go into it. You can select any assets you want, but most people choose real estate, investments, or bank accounts. To place the assets in the trust, you need to change the legal ownership of the assets from your name to that of the trustee. So, for real estate, you will need a new deed. For financial accounts, you transfer ownership to the trustee as well.
Reasons To Have a Living Trust
Consider adding a living trust to your estate plan if you face any of the following circumstances:
. You face estate taxes.
. Want to hold an inheritance for your minor children.
. You have children with challenges.
. Need to avoid probate.
. You wish to keep money in your family.
. Wish to maintain privacy.
. You are single with significant assets (or business interests).