Living Trust

Making a living trust is the easiest part, and the hardest one is funding the living trust. This is not an act of merely putting some money in the bank account covered by the trust, but also involves conveying titles to your other properties in favor of the trust.

By present day laws, you can undertake the funding of a living trust even while you are still alive, or at your option, upon your demise. Should you choose the former, what you do is you convey the ownership of your properties to a person named the trustee. This trustee shall be considered as owner of the properties covered under the trust. The properties under the trust are not subject to judicial scrutiny like probate. Conversely, any property not under the trust will of course be subject to probate proceedings.

But how does one does convey ownership of the properties unto the trustee for purposes of funding the living trust? What you do is make another registration of your title, but this time in favor of the trustee. For instance, you should execute a deed of conveyance of your title to your real property, but this time in favor of trustee. If you do not understand the procedure, it is advisable that you consult your lawyer first so as to be well informed of the consequences of such an act.

Moreover, by doing so, you will have an easier time on funding the living trust. The technique of a considerable number of lawyers in funding the living trust is to convey the properties in favor of a legal entity, like a partnership, instead of conveying it in favor of a trust. The partnership, although not really the owner of the properties, has control over it especially when it comes to its utilization.

Each individual composing the partnership is a trustee of the partnership properties. For bankers and other commercial institutions and entities dealing with properties under trust, this set up is better preferred than an ordinary living trust when it comes to funding the living trust. You may want to consult your lawyer about the usefulness of such an arrangement if you think that your property will be included in several commercial dealings.

A natural question however is, if ever some properties will still remain as your own, what should these be? The answer to these questions depends upon the tax laws of your country for trusts and statutory charges in funding the living trust.

There are spouses who prefer putting their community properties in the name of the living trust. Specifically, this is a trust under either of the names of the spouses. In this situation, your family lawyer may naturally suggest that the trust be in the name of both spouses, like John and Marsha. You should always remember that properties out of the trust would most probably undergo probate proceedings.

At this juncture, there is an important matter a married individual need to know in funding a living trust. In case the trust is in the name of one of the spouses only, and the other spouses is not under any arrangement like a succeeding trustee, it is not surprising that your family lawyer will advise you to leave out a bank account out of the living trust-for psychological and economic security.

For instance, by having a bank account under the name of both spouses, which account is not covered by the trusts, the surviving spouse, upon the death of the other, may easily draw on such account to sustain himself/herself. Although such property may be the subject to probate, still it is a good thing to do, as the surviving spouse is entitled to withdraw from it, despite some delays brought about by the probate proceedings.

Estate Planning Living Trust |