Is the trust in my will a living trust?
From time to time during estate planning consultations, people will tell me that they already have a trust. When they bring in their documents and we review them, it often turns out the trust they were referring to is in their will. This is not a living trust. What many people don't realize is that a trust in a will, known as a testamentary trust, has not been created yet. A testamentary trust only comes into being after you die.
Unlike a living trust, which is created when you sign the trust document, a testamentary trust doesn't come into being when you sign the will. Because it doesn't exist during your lifetime, a testamentary trust in your will can't help you during your lifetime.
Here's why a trust in your will can't help you; you can't use a trust in your will to hold your property now or to manage your property in the event you become incapacitated later due to an illness or an accident. Additionally, you cannot be a trustee or beneficiary of a testamentary trust created by your will.
In contrast, a living trust is a trust you create now. As a result, you can be a trustee and beneficiary of your living trust. A living trust allows you to keep certain benefits of outright property ownership while eliminating the disadvantages, such as: the need for a guardian of your assets if you become disabled and probate when you die.
A living trust is like a box into which you can place your assets now and maintain the right to use and benefit from those assets later. Assets in a living trust avoid probate when you are gone. Your living trust can even continue after your death and make payments to your children over their lifetimes. This can protect your children's inheritance from creditors and divorcing spouses. This type of protection is not possible when you give property outright to your children.
There are many different types of living trusts you can create during your lifetime. Some of these trusts are revocable, meaning you can make changes to them and even revoke them completely if you change your mind. Other types of trusts are irrevocable, meaning you cannot change or revoke them later. Irrevocable trusts may be useful for certain types of long-term care planning, protecting your child's inheritance, and for avoiding probate.
For more information, contact Nancy Roberts at Law Office of Nancy L Roberts PLLC by completing the contact form on this page, calling us at 704-887-5242, or emailing us at [email protected]
DISCLAIMER: This is an advertisement and contains general educational information only. The information offered in this post does not constitute legal advice and reading the information does not create an attorney-client relationship with Nancy Roberts or the Law Office of Nancy L Roberts PLLC Firm. Before taking any action, you should always seek legal advice from an attorney you hire, who advises you based on your specific facts, circumstances, situation, and the appropriate governing law.