Living Trust

Clients Rate Lawyers on our Platform 4.9/5 Stars
based on 2,724 reviews

Jump to Section

Need help with a Living Trust?

CREATE A FREE PROJECT POSTING
Post Project Now

What Are Living Trusts?

Living trusts are legal documents created to manage assets and estates. An individual makes a living trust while he or she is still alive. Living trusts allow a trust creator to transfer assets, bypassing the complex and often expensive process known as probate. Probate involves all legal proceedings to prove a will in court so that the will gets accepted as a deceased individual's last testament. Instead, a living trust designates a trustee to legally hold the assets and property that moves into the trust.

Unlike a will, which takes effect after someone passes away, a living trust allows individuals to manage their assets and estate during their lifetime so that their assets can eventually benefit someone else. The legal document, or trust, designates a person known as the trustee to manage the assets included in the trust. As long as an item has value, you can place almost any item into a living trust. Common examples of objects put into living trusts include the following:

  • Bank accounts
  • Fine art
  • Intellectual property
  • Jewelry
  • Mining rights
  • Real estate
  • Savings accounts
  • Vehicles

How Do Living Trusts Work?

Living trusts follow a few main steps:

  1. The person creating a living trust, known as a grantor or settlor, transfers ownership of property or other assets to the trust itself. For example, you can place the trust's name on your property deed or vehicle title. The items in the trust together form the trust fund.
  2. The grantor then appoints a trustee. The trustee must manage the trust in the beneficiary's best interest. In turn, the grantor may name a trustee who is a relative or appoint a professional trustee. Professional trustees often come from financial institutions. Either way, the trustee must make sure to carry out the instructions of the trust. Here is an article about how to choose a trustee.
  3. When the grantor dies, the trust flow assets to the trust's beneficiaries must follow the grantor's wishes outlined in the trust agreement. Unlike a will, the living trust is already in effect when the grantor is alive. Additionally, the trust does not need to clear the courts when the grantor dies or becomes incapacitated to reach the intended beneficiaries.

A settlor can leave a full inheritance to heirs as the beneficiaries of a living trust. Grantors can also add specific conditions for beneficiaries to meet before they can obtain items in the inheritance. For example, a grantor might stipulate that a grandchild named as a beneficiary must complete a college degree before receiving a vehicle in the trust.


Get Free Bids to Compare

Leverage our network of lawyers, request free bids, and find the right lawyer for the job.

Get Bids Now

Types of Living Trusts

Two types of living trusts exist, revocable trusts and irrevocable trusts. Some grantors decide to start with a revocable trust, converting the trust to an irrevocable trust later when they are confident of their beneficiaries or rules of the trust. Additionally, once a grantor dies, a revocable trust converts automatically to an irrevocable trust since the only person who can change the trust is no longer alive.

Revocable Trusts

A grantor can change or cancel a revocable trust at any time. A revocable trust, therefore, offers a flexible option. The settlor can alter or amend the trust rules, even changing beneficiaries or completely undoing the trust.

Revocable trusts are the most common types of living trusts. You might hear this type of trust referred to as a living revocable trust or a living trust.

A grantor can name himself or herself the trustee of a revocable trust to control the trust's assets. However, the trust assets remain part of the settlor's estate, potentially requiring the payment of estate taxes if the estate is worth more than the estate tax exemption at the time of the grantor's death.

Irrevocable Trusts

An irrevocable trust is an active trust. No one can alter it. Even the grantor cannot change an irrevocable trust. To change this type of trust, a judge must decide if individuals can amend the trust.

An irrevocable trust reduces the taxable estate, but the grantor gives up certain control rights to enjoy this benefit. In effect, the trustee becomes the legal owner of the items in the trust. Additionally, once the grantor makes the trust agreement, individuals can't amend the trust's named beneficiaries.

Image via Unsplash by rowlpics

Advantages and Disadvantages of Living Trusts

Living trusts offer many benefits, but they have some drawbacks, as well.

Advantages of living trusts include the following:

  • Saving time and money: Living trusts do not have to go through the probate process. The trustee can take care of the grantor's end-of-life affairs, such as funeral costs and distributing assets to the beneficiaries, without waiting for a probate judge's decision. This arrangement also cuts down on costs. Here is an article about the probate process.
  • Offering protection if challenged: It is more difficult for potential challengers to challenge a living trust than a simple will. Someone would have to prove that the grantor became coerced into signing the living trust documents and forced to go through the trust funding process to challenge a living trust successfully.
  • Offering more privacy protection: A will is a public document. Anyone can obtain a copy of a will from legal records after someone dies. However, a living trust is completely private. Unless the trustee shares the information, no one will know the living trust's details.

Disadvantages of living trusts include the following:

  • Attorney fees: Living trusts require attorney support to set up. Likewise, if grantors want to change anything, they will need to work with an attorney.
  • Possible inconveniences: Since a grantor sets up a living trust before death, he or she no longer owns the property contained in the trust. If grantors wish to sell something that the individual previously included in the trust, such as a car or house, they would first have to contact the trustee to take the item in question out of the trust.
  • The necessity to retitle and re-deed: The grantor must re-deed or retitle property and other assets in the trust to name the trust fund as the owner. A living trust cannot work to its full potential unless the grantor goes through this process.

Here is an article about Probate Lawyers.

How Are Living Trusts Different From Wills?

A few key differences exist between living trusts and wills, including the following:

  • Guardianship: Only a will can appoint a guardian for a child. A living trust cannot set up a guardianship.
  • Probate process and costs: Although a living trust requires attorney fees to set up, it does not require probate costs. On the other hand, any property someone receives through a will is subject to probate.
  • Status as a public document: A will is a public document that relatives can check at any time. A living trust protects the information within it.
  • Time to set up: A living trust requires more paperwork and time to set up than a will requires.

Setting up a living trust requires you to make careful decisions and considerations. Work with an experienced lawyer who can help you make sure your wishes are transparent. In the end, you want to create a living trust that passes your assets to your beneficiaries in the way that you intend.

How ContractsCounsel Works
Hiring a lawyer on ContractsCounsel is easy, transparent and affordable.
1. Post a Free Project
Complete our 4-step process to provide info on what you need done.
2. Get Bids to Review
Receive flat-fee bids from lawyers in our marketplace to compare.
3. Start Your Project
Securely pay to start working with the lawyer you select.

Meet some of our Living Trust Lawyers

View Michael
Member Since:
June 28, 2021

Michael K.

Associate Counsel
Free Consultation
Get Free Proposal
Miami, FL
4 Yrs Experience
Licensed in FL
St. Thomas University School of Law

A business-oriented, proactive, and problem-solving corporate lawyer with in-house counsel experience, ensuring the legality of commercial transactions and contracts. Michael is adept in reviewing, drafting, negotiating, and generally overseeing policies, procedures, handbooks, corporate documents, and more importantly, contracts. He has a proven track record of helping lead domestic and international companies by ensuring they are functioning in complete compliance with local and international rules and regulations.

View Erin
Member Since:
June 28, 2021

Erin F.

Attorney
Free Consultation
Get Free Proposal
Costa Mesa, CA
15 Yrs Experience
Licensed in NJ, NY, PA
Rutgers University School of Law (JD)

Businesses, Contracts, Operating Agreements, Corporate, Real Estate, Start-Ups, Cannabis

View Drew
Member Since:
June 30, 2021

Drew B.

Managing Member
Free Consultation
Get Free Proposal
Cleveland, Ohio
24 Yrs Experience
Licensed in MO, OH
Saint Louis University

Drew is an entrepreneurial business attorney with over twenty years of corporate, compliance and litigation experience. Drew currently has his own firm where he focuses on providing outsourced general counsel and compliance services (including mergers & acquisitions, collections, capital raising, real estate, business litigation, commercial contracts and employment matters). Drew has deep experience counseling clients in healthcare, medical device, pharmaceuticals, information technology, manufacturing, and services.

View Daniel
Member Since:
July 1, 2021

Daniel R.

Managing Attorney
Free Consultation
Get Free Proposal
Chicago
9 Yrs Experience
Licensed in IL
Gonzaga School of Law

Daniel is an experienced corporate attorney and works closely with corporations, privately held companies, high-net worth individuals, family offices, start-ups and entrepreneurs. Daniel graduated from the Gonzaga University School of Law and is licensed to practice law in Illinois.

View Roman
Member Since:
July 9, 2021

Roman V.

Trademark Attorney
Free Consultation
Get Free Proposal
Milwaukee, WI
8 Yrs Experience
Licensed in MD
Marquette University Law School

I'm an experienced trademark attorney and enjoy helping clients protect and grow their brand names through trademark registration and enforcement. I've worked with a wide variety of clients in different industries, including e-commerce, software as a service (SaaS), and consumer goods, to register trademarks for product names, logos, and slogans, both in the US and abroad.

View Adam
Member Since:
July 6, 2021

Adam L.

Legal Counsel
Free Consultation
Get Free Proposal
London
13 Yrs Experience
Licensed in NY
University of London - Masters

12 Year PQE Lawyer with wide experience in sports, media and tech.

View Justin
Member Since:
July 7, 2021

Justin A.

Partner
Free Consultation
Get Free Proposal
Seattle, WA
5 Yrs Experience
Licensed in NY, WA
The University of Chicago Law School

I am an entrepreneurial lawyer in the Seattle area dedicated to helping clients build and plan for the future. I earned my law degree from the University of Chicago and worked in a top global law firm. But I found advising real people on legal issues far more rewarding. Reach out to discuss how we can work together!

Find the best lawyer for your project

Browse Lawyers Now

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call