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Frequently Asked Questions - Living Trust
 
1. What is a Living Trust?
2. How does a Living Trust Work?
3. What is Probate Court?
4. Who shall I select as my Trustee?
5. What property can be placed into a Living Trust?
6. How do I transfer property into my Living Trust?
7. Will I still be in control of my assets when I transfer property to the Trust?
8. Does a Living Trust protect me from creditors?
9. What if I did not add property to my Living Trust?
10. What are the tax consequences of a Living Trust
11. Do I need a Last Will if I have a Living Trust?
12. Can I make changes to or revoke my Living Trust
13. What if my spouse and I want to keep certain assets separate?
14. What is a Testamentary Trust?
15. How Does a Living Trust serve as a substitute for a Last Will?
16. If I have a Living Trust, do I still need a Power of Attorney?
   
 
 
 
1. What is a Living Trust?
  A ‘trust’ is a relationship under which one party holds property (real or personal) for the benefit of another. The party creating the trust is called the ‘grantor or settlor’, the party holding the property is called the ‘trustee’, and the party for whose benefit the property is being held is called the ‘beneficiary’. A Living Trust may be set up so that you can retain complete control of your assets by appointing yourself as trustee. You may also elect to appoint a trusted loved one, friend, or even a banking institution. It is called a ‘Living’ trust because it is created and remains active during the settlor’s lifetime, unlike a Last Will – which becomes effective upon death.
 
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2. How does a Living Trust Work?
  The maker of the trust places assets such as real estate and bank accounts into the trust, naming him or herself and/or another person as ‘trustee’ for the management of these assets. Upon the death of the maker, the assets named in the trust are automatically transferred to the beneficiaries designated, without the hassle and expense of probate court. A successor trustee is appointed to handle the transfer.
 
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3. What is Probate Court?
  This is the court process of determining ‘who gets what’ after a person dies. If you die with a Last Will, you are said to have died ‘testate’. If you die without a Last Will, you have died ‘intestate’. The probate process can be lengthy, especially if you die ‘intestate’. A Living Trust can by-pass probate court and distribute your assets quickly and painlessly.
 
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4. Who shall I select as my Trustee?
  Your trustee is responsible for the management and distribution of the assets placed into the Living Trust. The maker of the trust usually appoints him/herself as the trustee of the trust. This ‘self-appointment’ allows one to manage the trust assets during their lifetime. The appointment of one or more ‘Successor Trustees’ will ensure that someone will be able to carry out your wishes if you are incapacitated or should pass away. Before appointing a Trustee or Successor Trustee, be sure that person is capable, willing, and trustworthy of handling your assets.
 
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5. What property can be placed into a Living Trust?
  Many types of property can be placed into your Living Trust, including: real estate, stocks, bonds, life insurance policies, bank accounts, jewelry, antiques, artwork, boats, automobiles, trademarks, patents, to name a few.
 
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6. What is consideration?
  The act of creating your Living Trust does not transfer all of your property and assets to it. You must ‘fund’ your trust by transferring property as you would to any other third party. A ‘bill of sale’ is used for any personal property such as a piece of artwork; a ‘transfer deed’ is used for any real estate; and an ‘assignment of property to trust’ is commonly used for automobiles and intangible items such as copyrights. CreateLegalDocs.com provides you with specific instructions and documents required to properly fund your Living Trust.
 
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7. Will I still be in control of my assets when I transfer property to the Trust?
  Yes, so long as you name yourself as the ‘trustee’ of your Living Trust. You will be able to make decisions and transfers just the same as before the trust was created. If you name a Co-Trustee, keep in mind that they will have the same powers as you do. (Co-Trustees are common with husband and wife created trusts).
 
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8. Does a Living Trust protect me from creditors?
  A Living Trust will not provide protection from creditors. This is due to the fact that the maker of the trust can reclaim ownership of trust property at any time. Only a Irrevocable Living Trust can provide protections from credits, but keep in mind that no changes may be made to this kind of trust once created.
 
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9. What if I did not add property to my Living Trust?
  Property may be voluntarily or involuntarily left out of your Living Trust. A ‘Pour Over Will’ catches any property not transferred to the Living Trust and directs it to your beneficiaries. Property outside the trust will have to go through the Probate process. CreateLegalDocs.com provides it’s customers with a free ‘Pour Over Will’.
 
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10. What are the tax consequences of a Living Trust
  Generally speaking, there are no special taxes associated with your Trust. You can use your social security number to identify the Trust, as long as you appoint yourself as Trustee. If your net worth exceeds $2,000,000.00, you should consult with your financial consultant before setting up your Living Trust.
 
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11. Do I need a Last Will if I have a Living Trust?
  Yes.  Any property that is not transferred into your Trust will be subject to probate court.  A ‘Pour Over Will’ catches any property outside of the Trust and directs it to your beneficiaries.  CreateLegalDocs.com provides it’s customers with a free ‘Pour Over Will’.
 
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12. Can I make changes to or revoke my Living Trust
  Yes, so long as you are named a ‘trustee’, you can make changes to or revoke your Living Trust.  Common changes include: change of trustee, change of beneficiaries, change in trust terms, and revocation of trust.
 
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13. What if my spouse and I want to keep certain assets separate?
  No problem, we can create multiple trusts: one for the wife with specific property, one for the husband with specific property, and one which includes all co-owned marital property.
 
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14. What is a Testamentary Trust?
  A testamentary trust is created by a Will for the sake of controlling property left for minors, spendthrifts, or incompetent individuals. Upon your death, there may be certain conditions to be met before your beneficiaries can access the assets left to them. For example, a Testamentary Trust would be required if you leave your home to a minor child. A guardian would be appointed to manage the property and care for the child and property until a requirement is met – “my child turns 18 years old” or “my child graduates from 4 year college”).
 
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15. How does a Living Trust serve as a substitute for a Will?
  The trust document provides for the distribution of the settlor's assets upon his or her death. The trustee distributes the trust assets directly to the beneficiaries designated in the trust instrument. There is no automatic court supervision or probate of this distribution process as with a Last Will. This is faster and less costly than the distribution of assets pursuant to a Will.
 
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16. If I have a Living Trust, do I still need a Power of Attorney?
  It is usually advisable to have a Power of Attorney for decisions regarding real property or healthcare decisions, because some decisions that must be made on your behalf do not fall within the powers of a Living Trust. For example, if you are out of the country and need a real estate contract signed, your ‘successor-trustee’ would not be able to perform this act, because their power becomes effective only when you die or are incapacitated.
 
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