A Living trust is a written document that you can use to partially substitute for a will. In a living trust, your assets will be put into a trust and it will be administered for your benefit during your lifetime. Then when you pass away, the assets will be distributed to your beneficiaries according to the wishes you specify in your trust.
In a living trust, you can name yourself as your own trustee. That way you yourself continue to manage your own assets during your lifetime. Thus, even if all of your assets are transferred to a trust, the assets will remain in your control as you can name yourself as your own trustee. You may also name a successor trustee who will then manage the trust assets in the event of your incapacity or death. In the case of joint living trust between spouses, they normally name one or the other or both as the trustee; and, in the event of death or incapacity of one spouse, the surviving spouse becomes the successor trustee.
If you make a revocable living trust, you may amend or revoke the trust at any time as long as you are still competent. The living trust you create will:
(1) Give the trustee the legal right to manage and control the assets that you put into the trust.
(2) Give instructions to the trustee to manage the assets in the trust for your benefit and in accordance with your wishes.
(3) Name the beneficiaries of your assets in the event of your death. Should you still have minor children, you may also nominate their guardians.
(4) Give instructions to the trustee on the management and distribution of your assets in the event of your incapacity or death. The successor trustee is a fiduciary who is subject to strict responsibilities. The successor trustee cannot use the trust assets for his or her own benefit but have to use the trust assets for the benefit of the beneficiaries you name in your trust.
Depending on your assets at the time of death, a living trust can be an important part of your estate plan. It can ensure that your assets will be managed according to your wishes even if you become incapacitated later on.
Normally, when you set up a living trust, you initially name yourself as your own trustee. You can likewise name a trusted person as a successor trustee should you ever become incapacitated. In the event of your death, the successor trustee can then gather all your assets, pay all your debts and distribute all your remaining assets to your beneficiaries in accordance with your instructions in the trust. This works very much like a will. The difference, however, is that a living trust takes effect right away while you are still living while a will takes effect only when you die. Furthermore, in a living trust you do not need to undergo probate as your assets will be distributed by the successor trustee to your beneficiaries without having to go to court for permission to do so. On the other hand, a will has to be probated in court and court approval will have to be secured before assets are distributed to your beneficiaries.
So who needs a living trust? Generally young married couples without significant assets and without children, who merely intend to leave assets to each other when the first one dies do not need a living trust. Other people who do not have significant assets and have only simple estate plans may also not need a living trust. People who may want the courts to supervise the distribution of their assets to their beneficiaries should not have a living trust. The greater the value of your assets, specially if you own real estate assets, then the greater may be your need for a living trust which may be important in the event of an accident or sudden death.
(DISCLAIMER: material presented above is intended for informational purposes only. It is not intended as professional advice and should not be construed as such. Rey Tancinco is a partner at Tancinco Law Offices, a professional corporation with offices in San Francisco, Vallejo, and Manila. The law office website is at: tancinco.weareph.com/old. Rey Tancinco can be contacted at (800) 999-9096 or (415) 397-0808 or via email at: attyrey@tancinco.com
