A living trust is a written document that allows you to control the distribution of your property after your death, like a will. It differs from a will in that a living trust takes effect during your lifetime, as soon as you transfer property or money into the trust’s name.
As the grantor or creator of the trust, you put a certain amount of money or property into the trust for a beneficiary. You also name someone to be the trustee. The trustee is responsible for managing the property or money in the trust while you are alive. Any responsible individual can be a trustee; you can name yourself, another person, or an entity, such as a bank. In a living trust, you also name a backup trustee to manage the property and distribute it according to your wishes after your death. The role of the backup trustee is similar to that of the personal representative named in your will.
Living trusts are particularly appealing to some individuals because, unlike a will, property or money placed in a living trust does not generally have to go through probate. In addition, you can transfer money more privately using a living trust. A will is a public document as soon as it is submitted for probate. Another advantage of a living trust is that you can name someone to manage your assets in the event that you become unable to do so.
A disadvantage of having a living trust is that you must transfer money or property into the trust when you create it. Therefore, you may find yourself unable to get to this money if you need it. AARP cautions against companies that use telemarketing and other techniques to sell living trust “kits” or “packages.” The AARP notes that these companies often charge more than an actual attorney would charge and greatly exaggerate the costs and delay of our state’s probate system. Often, the people who write these documents are not attorneys, and even if they are, they may not be licensed in West Virginia. In such circumstances, the living trust created by these people may not conform to state law.
To be effective, a living trust should be individualized to your particular needs and wishes. Living trusts sold over the phone in a package or kit are generally not personalized to handle your particular situation adequately. Sometimes, people selling these kits will imply that the AARP endorses their product; however, the AARP does not sell or endorse any living trust product.
A living trust can be an effective estate planning tool for people in certain kinds of circumstances; however, it is not appropriate for most people. Whether a living trust is right for you depends upon your particular circumstances, and consulting a trust attorney for personalized advice can not only help you decide whether a trust is right for you, but how to be sure all the assets you want to include in a trust are properly titled.
For more information, see: AARP, The Truth About Living Trusts, http://www.aarp.org/money/estate-planning/info-04-2009/truth_about_living_trusts.html (last visited June 4, 2015).