What To Expect When Creating a Living Trust
Creating a living trust should be part of your retirement planning strategy if you want to preserve and protect your assets. Here are the steps you can expect when drafting a living trust with your financial advisor:
Draft a Living Trust
First, your financial advisor will help you set up and name a trust into which you’ll later transfer your assets. Putting your financial assets into a living trust removes your name from them and instead transfers ownership to the trust. You’ll then name you and your spouse as the trustees of the living trust. You can list any children, grandchildren, or dependents as your beneficiaries. The great thing about a living trust is that you won’t lose control of your assets and can continue managing their daily operations.
List Assets
Include any assets you own that you want to transfer to the living trust, such as real estate, investment accounts, money market accounts, and annuities. Consider also including physical assets, such as jewelry, gold or safe deposit boxes, and life insurance policies. It’s also possible to put businesses in a living trust, including sole proprietorships, partnerships, and limited liability corporations.
Consider Non-Eligible Assets
You cannot put some assets, such as retirement accounts, into a living trust while living. However, you can name your trust as the beneficiary and pinpoint how the funds should be spent. Naming your living trust as the beneficiary means the funds will transfer to the trust after your death. The same goes for health savings accounts. Other assets that may require special planning include active financial accounts and vehicles.
Create Directions
Each living trust should include directions on how to transfer each asset. You can specify who receives what, when, and under what circumstances. Your directions may vary depending on the beneficiaries’ age, marital status, and specific assets.
Your instructions can also include who will take care of minor children. A living trust allows you to be specific, including on matters such as property transfer, vacation funds, or educational expenses, which can help your designated beneficiary care for your minor child.
Identifying specific directions may also include adding clauses. Certain clauses, such as no-contest, mental competency, or distributions to a disabled person, are situationally specific. Working with a financial advisor may be even more important if you have any special circumstances that require careful direction.
Assign Controller
You can designate who should be in charge of your trust, known as the successor trustee. You may choose a temporary person until a child reaches a certain age. Your controller can be someone who understands your assets to help protect and manage your funds. It’s possible to assign multiple trustees to manage different aspects of a living trust. For example, you might have one person manage business assets and another personal property assets.
Make Updates as Needed
It’s important to update your living trust as asset ownership changes. If you sell or acquire new assets, you’ll need to update your living trust. You can usually change a revocable living trust through living trust amendments. A living trust amendment updates certain parts of your living trust without redoing the entire document.
Making living trust updates with Anderson Advisors is easy. As long as Anderson Advisors created your initial living trust, you can conveniently request updates via email, and our Estate Planning Department will make the changes. Of course, you can always request a living trust review with our financial advisors if you don’t yet have one or are no longer working with the original firm that drafted your trust.
A living trust offers many benefits, including preserving and protecting your assets. Not only does a living trust protect you while living, but it also helps your beneficiaries access assets easier without costly or timely probate. Contact Anderson Advisors today for a consultation, where we’ll review your living trust or help you set up a new one from scratch. We’ll help you create specific instructions to ensure your assets are allocated according to your plans.