Living Trust

Introduction

Estate planning requires weighing several factors and different legal documents to be certain that your beneficiaries acquire your estate in accordance with your instructions. This article has been written for the purpose of giving you a backgrounder of the living trust law and other matters related thereto. Most of the discussions in this article have been taken from the living trust law of the state of Washington, which were amended in 1984, and the Tax Reform Act of 1986. Please check with a lawyer in your state for differences that may apply in your state of residence.

Definition of a Trust Under the Living Trust Law

Per living trust law, a living trust is a contract by which real and personal properties are being managed by an individual for the sake of another. This trust is created and takes effect during the life of its creator, called the trustor. Several kinds of trust may be made in order to attain certain objectives. Variations in each type depend on the extent of control over the properties held in trust, and the living trust law in existence.

The usual advantages of living trust contracts recognized under the living trust law are as follows: * It provides a measure of protection for members of your family and relatives, * It makes possible tax avoidance, * It provides a way by which the estate could be properly managed, and * It enables one to attain other specific goals related to economic security.

Creating a Trust Under the Living Trust Law

Certain requirements under the living trust law must be satisfied in order to make a living trust, namely, the need for a trustor, a trustee, trust properties, and the beneficiaries.

The person who makes the trust and provides the funds and other properties for it is called the trustor. Under the living trust law, this individual is also called the grantor.

On the other hand, the trustee is the natural or juridical person that has the apparent ownership of the property. If not designated by name, the court will appoint a trustee. There is also a possible situation wherein there are several trustees acting in unison or separately, and serving a natural or juridical person or both. Separate trustees may also be designated to administer estates located in different part of the globe.

The beneficiary is the person who is to reap the good from the trust. Basically, any natural or juridical entity could be a beneficiary, including organizations and governmental bodies.

To be valid, a trust must have properties in the name of the trustee. The properties can be real or personal ones or even a right.

The form of the trust is the trust contract that accurately embodies the intent between the trustor and the trustee. This form has the directions to be followed in the administration and disposal of the trust properties.

Trust agreements, however, may be expressed in writing, by oral agreement or may be implied, and the trustor usually has considerable latitude in setting the terms of the trust. To be enforceable, a trust involving an interest in land must be in writing.

Types of Trusts

You can choose from many kinds of trusts. Under the living trust law, a trust may be classified by their objectives to be attained, the way by which it came into legal existence, the type of properties it has, and the time of the effectivity of the trust. One usual way to classify a trust is by relating it to the life of its maker. At this juncture, it must be noted that the trust could be classified as inter vivos or testamentary.

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