Living Trusts

A will is a document regarding your property, how you want it distributed and the people you want to leave it to. Your will can only benefit you after you die. It is a different thing from what you call a living trust, which can already benefit you while you are still alive.

A living trust is not only used to manage your property while you are still alive, but also to determine how this property, your estate and your assets, will be distributed after your death, so in a way, it is still quite similar to a will. Basically a trust will help you manage all your financial affairs. You can transfer all your property into a living trust, and again like a will, you can still make any changes to any arrangements and propositions. After your death, any remaining assets and property can be transferred into the living trust through a Pour-Over Will, and the name is pretty much self-explanatory. If you decide to make a living trust, it is important to make a Pour-Over Will to go with it. The property included in the trust are managed by one person (but it can be more than one, or even organizations as a whole) to benefit another. However the property is owned by the trust. The creator of the trust is called a settlor, and the people he/she has chosen to be beneficiaries of his/her property are called the trustees. The trustees become the legal owners of the property included in the trust, who hold the property for the benefit of individuals or organizations, called the beneficiary, that have been chosen by the settlor.

You can also make joint living trusts. Basically you can combine the property and assets of a married couple together into a single trust and it will be governed by a single trust document and validated by the law. There are certain complications when you wish to make a joint living trust, however, like tax minimization and such, so it is best to consult a lawyer to help you so there wouldn't be any more problems later on.

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I Have a Revocable Living Trust - Do I Need a Will, Too?

If you have a Revocable Living Trust, one of your main reasons for choosing this method of estate planning was likely to avoid probate.

Trusts Need to be Funded

So, you know that you need to fund your trust in order for it to be effective. In other words, you know you need to transfer property into your trust so that the property won't have to go through probate when you pass away.

Would it surprise you to know that, even if you have a Revocable Living Trust that you intend to fully fund, you still need a will?

At first blush, this may not make much sense, because a Revocable Living Trust is designed to help you avoid probate, while a will is designed to go through probate. But here's why you need both:

Why Wouldn't My Trust Be Funded?

People don't always fund all their property into their Revocable Living Trust before they pass away. There can be a few different reasons for this, for example:

• Sometimes, they buy property and just don't have time to transfer it into their trust before they pass away;

• Sometimes, for practical reasons, they intentionally leave property (like motor vehicles) out of their trust;

• Sometimes, they just plain forget.

What Happens When Property is Left Out?

Whatever the reason, if property is left out of your trust when you pass away, and it doesn't automatically pass to someone else through joint ownership or a beneficiary designation, then it's subject to probate. Without a will, property that goes through probate is distributed based on a formula provided by state law. This means that your property might not go to the beneficiaries of your choice.

The Solution

If you have a trust, you also need what's called a Pour Over Will. This is a will that directs all of your probate property to be distributed to your trustee. Once your property clears probate, your trustee will distribute it according to the terms of your trust. So, even though your left-out property has to go through probate, it eventually ends up where you intended it to go.

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Health Care and Living Wills Versus Power Of Attorney

Within your own personal health care there is the end of life issues that can occur. Knowing how you want these handled is important, so that there are not other problems that can arise if the situation were to occur. Even where is a living will in place, a power of attorney should also be in place as well, this helps to ensure that all issues are thoroughly covered and you know you will be taken care of the way you want to in the event of end of life.

Living Will

A living will covers what to do and not do in the event that there are end of life decisions to make. This document only goes into effect when you are no longer able to make decisions yourself and you are incapacitated. This could be for numerous reasons, from a coma to an injury that has occurred. It also covers if you are completely mentally incapacitated as well. A living will typically covers:

Medical Care That Prolongs Life - This is care and treatment that will prolong your life. This could be blood transfers, dialysis, drugs, surgery or respirators for instance. DNR or Do Not Resuscitate Orders - These stipulations work with the above in the sense that you can specify whether you wish to be resuscitated or receive CPR. These types of orders should be specified to the hospital and doctors you work with, as well as wearing a medical alert bracelet that specifies this decision. Food and Water That Prolongs Life - This specifies whether you want to receive food and water through external means. This can happen when there is an injury or a coma and a person can only live through intravenous food and water. Typically when these are stopped a person will pass away from dehydration. You can specify if you want this type of treatment, the conditions when this should happen and for how long this should go on for. Management Of Pain - This is also called comfort care as well and it is when you decide to die naturally, but not in pain. You are kept comfortable while dieing to improve the quality of life and dignity in the event of death. You can specify that drugs do be administered to keep you comfortable, but not in pain.

Power Of Attorney

Even when there is a living will in place, a durable power of attorney for health care decisions is necessary and recommended. The agent is given only as much power as you decide and can cover all decisions that the living will does not cover. If you do not specify the amount of power given, many states allow the agent comprehensive power when it comes to end of life decisions. A durable power of attorney for health care can cover, but is not limited to:

The power to consent to medical treatments. The power to deny medical treatments. This is as long as it does not go against anything that is already in your living will. Making the decision of which medical facility to use. They can make the decision of which doctors and other personnel to use for your treatment. They can go to court on your behalf to determine whether to with hold or continue medical treatment. The power to decide what to do with your remains and whether or not to donate your organs. Make sure to specify your wishes on these matters in the living will and even in the power of attorney document when you have direct feelings about these practices. They can access your medical records. They typically do have visitation rights. What Is The Role Of A Probate Solicitor?   New Year's Resolution: Make or Revise Your Will   How Inheritance Claims Can Prove Very Difficult   10 Top Terms Used In Wills and Will Writing   An Intro Into Properties Planning   Special Needs Trusts - What Are They?   

Why a Living Trust Is Usually Made

There are several possible reasons why a trust is made.

A trust is created for privacy. While a trust is similar to a will, one of its differences is that terms stated in a will are made public while those of a trust are not. This is the reason why there are some families who prefer to use trusts, to keep them private from unwanted eyes and ears.

People also make living trusts for spendthrift protection. A lot of people seem to have a hard time budgeting and handling their money, and by putting money in the trust, one can protect him/herself from spending the money in ways not specified in the trust. There are several ways the distribution of money in a trust can be structured, and trustees can disburse the contents of the trust based only on the causes and beneficiaries specified in the trust document.

Living trusts also lend a hand in wills and estate planning. Trusts often appear in wills, as the distribution of property and estate in wills is a form of trust. There are certain parallels as well, such as the Executor of the will similar to the trustee and the children (who are usually the inheritors of the property in a will) are the beneficiaries. Because a trustee helps the beneficiaries during the whole process, having both a will and a living trust secures that your children get everything you intended for them through a trustee.

Another reason for getting a trust is for charitable organizations who must take the form of trusts as stated in most laws; there are other forms but the trust is the most common one a charity can take. Charities are for the benefit of the public. A trust can also be capable of working as an investment vehicle known as the unit trust.

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