Living trusts function as the cornerstone of many estate plans, but many people are unware of the reasons that this form of document provides such an effective legacy succession tool. Although one of the principle benefits of a living trust is to provide an efficient method for distribution of the assets of an estate to a decedent’s beneficiaries, this financial planning device might offer other benefits, such as asset protection, tax benefits, planning for heirs with special needs, probate avoidance and more. Since a living trust can take many forms, experienced Wichita Estate Planning Lawyer J. Joseph Weber discusses your goals and concerns to create a living trust that is consistent with your priorities. This blog post provides answers to three important questions we frequently receive from clients about living trusts.
Does preparation of a will mitigate the need to create a last will and testament?
Although a living trust will become the principle estate planning device for designating how your assets will be distributed to loved ones, charities, and others, there are functions that a will still serves. If parents with minor children prepare a living trust, this document cannot be used to nominate a legal guardian for the children in the event of the passing of both parents. A last will and testament can be used to designate guardian(s) for your children. Even if an individual does not have minor children, a “pour-over will” still is appropriate to indicate your desired distribution for assets that are never transferred into the trust. This simple type of will ensures that residual assets that are inadvertently omitted from the trust still pass to loved ones and others as intended by the decedent.
What is a living trust?
In basic terms, a living trust defines a legal relationship created by a trust agreement which transfers legal ownership of assets into a trust. The assets are held in the trust and managed for the benefit of the designated beneficiaries of the trust. An “inter vivos” trust (also referred to as a “living trust”) is created while the creator of the trust (“trustor”) is still alive. The trust agreement will appoint a trustee, who can be the trust creator, to manage the property during the life of the trustor. The trustee then oversees distribution of the assets in the trust after the term of the trust elapses, which often is upon the death of the trustor. Because the specific benefits provided by a trust differ depending on the needs and goals of the trustor, it is important to discuss your situation with an experienced Kansas estate planning attorney.
Can I use a commercially marketed software program or templated forms from a stationary store to prepare a living trust agreement?
While there is nothing that expressly prohibits use of this type of DIY approach to drafting a trust agreement, this approach is ill-advised for a variety of reasons. Generic forms that are pre-printed or generated by a software program might not comply with state law. Further, there are many forms of living trust agreements, so selection of the terms and provisions that are appropriate for your specific purposes requires customization. Aside from problems that might arise in the drafting of the trust, implementation of the trust also often poses problems when a trustor proceeds without legal advice. A common error in terms of implementing a trust involves a failure to properly transfer ownership of the assets to the trust.
If you have questions about living trusts, we welcome the opportunity to talk to you. We invite you to call the Wichita Estate Planning Lawyer at the Weber Law Office at 316-265-7802 or to submit an inquiry form through this website to schedule your initial consultation.