Who controls the property in a living trust?
“If I set up a living trust, will I lose control of the property that I transfer to the trust?”
No. A properly drafted living trust will make you both the trustee and the beneficiary during your lifetime. So you will retain the right to manage your property as trustee and you will keep all income earned as the lifetime beneficiary of the trust. If you want to sell the property and spend the proceeds, or if you want to make an immediate gift of the property you have placed in trust, you can always revoke the trust and have the property returned to you free of trust. If you change your mind and want to add or change the names of those beneficiaries who will enjoy your property after your death, you can always amend your trust.
How do I transfer my property to the trust?
If you establish a living trust, you must properly transfer title of your property to the trust. With some kinds of property (real estate, securities, bank accounts, vehicles), this means you should prepare new ownership documents. For example, if you want to place your home or other real estate in trust, you will have to prepare a deed naming the trust as owner. With other assets, that do not have title documents (furniture, paintings, collectibles, etc.), you can transfer the property to the trust simply by listing the property in the trust document.
What about taxes?
A living trust will not reduce your income taxes or any estate or gift taxes that might be due when you die.
If you name yourself the trustee for the trust, you will not need to obtain a taxpayer ID number for the trust, file trust tax returns, or keep separate tax records for the living trust. You should, of course, keep track of any income that the trust property earns, because you will need this information for your personal income tax return.
Can couples share the same trust?
With couples, whether married or not, each can create his or her own separate trust, but it is more common for the couple to create one shared living trust. You and your spouse would transfer property that you own together (joint tenancy property and, in certain states, community property) to the trust. In addition, either or both of you could transfer property that you own in your own name to the trust.
These trusts will normally provide that either spouse can revoke the trust during the joint lifetimes of the couple, but that the trust becomes irrevocable upon the death of the first spouse to die.
During the joint lifetime of the couple, the income from the trust is usually distributed to the couple. After the first spouse dies, the surviving spouse continues to receive all of the income earned by the trust. Only after the death of the second spouse is the property distributed to the ultimate beneficiaries.
Do I need a will if I have a living trust?
Yes. In most cases you will be transferring your major assets to the living trust, but you will still own other property at your death. The most common example will be household items and, of course, any property you purchase or accumulate after you created the trust. To take care of the disposition of this “other property”, you should have a will.
Do I need a lawyer to create a trust?
If you have a sizable estate or if you have a complicated family situation (such as children from more than one marriage), you will probably be better off seeing an experienced estate planning attorney. A lawyer can help you structure your living trust to minimize both taxes and probate fees and see that your property goes where you want it to go. The lawyer can also advise you of alternative devices that can save you money and/or increase your control over the property.