A lot of people who research estate planning come to the conclusion that they need to create a revocable living trust. While a revocable living trust is an excellent estate planning tool to have, it’s also something that can be a little difficult to understand. Further, you might come across some popular myths and misperceptions about living trusts that could get in the way. To help explain living trusts and show you why some of the popular myths are wrong, let us take a look at some common misperceptions.
All you need to do to create a living trust is create the trust instrument.
The trust instrument is the document that will actually create the revocable living trust. All trusts start with this key document, but the process of trust creation doesn’t end there. Instead, once you have the trust instrument in place, you must then go about the funding process.
Funding is what gives the revocable living trust its teeth. When you fund the trust you take some of your individually owned property and transfer it into the trust’s name. So, after you die, the trust will be able to take the trust property and transfer it to your heirs outside of probate.
If I have a trust I don’t need a last will and testament.
Both revocable living trusts and wills serve to allow you to transfer inheritances. However, a will is still an essential document even if your estate plan includes a living trust.
Only through your last will and testament can you select a personal representative, also known as executor, who will manage your non-trust estate after you die. A will also allows you to nominate a guardian who will be able to care for any minor children you might leave behind.
Further, revocable living trusts are typically paired with what is known as a “pour over” will. A pour over will is designed to take any property you might have left out of your living trust and transfer it to the trust after you die. In this way, pour over wills are an essential safety net that you must include when you decide to create a revocable living trust.
A living trust is all I need.
Not only will your estate plan also need a will, but you’ll also want to include several other key documents. For example, neither a will nor a living trust will allow you to name a representative who will speak to your doctors on your behalf should you become and capacity. Further, other estate planning needs might require you to develop more specialized tools.
The best way to ensure that your estate plan is created correctly is to work with an experienced and qualified estate planning attorney.