When people come talk to us about creating a revocable living trust, one of the main concerns they often ask us about is whether they can retain control of their property. In fact, many people are reluctant to create a living trust because they fear losing control over their possessions.
While this fear is understandable, it’s based on a misunderstanding of how a living trust works. So, to help better explain why you won’t need to fear losing control over the property you place in your living trust, let’s take a look at some important issues.
You create your living trust.
As a person who creates a trust, known as the trustor or a settlor, you get to determine the terms under which your trust operates. A revocable living trust, more commonly referred to as a living trust, allows you the opportunity to make inheritance decisions outside of the probate process. Through your living trust, you will effectively be able to pass inheritances on to others without the property having to go through the cumbersome probate process. The terms of your living trust, therefore, will state your inheritance preferences in detail. As long as you remain mentally competent, you will be able to modify these terms and make different inheritance choices whenever you like.
You transfer your property into the living trust.
A living trust is a separate legal entity that you create, and which can exist independently of you. Once you die, the living trust can continue to exist and will be able to transfer the property it owns in accordance with the terms you establish.
The property the trust owns is any property you choose to transfer into its name. For example, if you own multiple vehicles, you can transfer those vehicles into the trust name by retitling them in the name of your revocable living trust. Once you complete this property transfer, a process known as funding the trust, the trust will then become the effective legal owner of all the property you transfer into it.
You control the property because you are both the trustee and the beneficiary.
The property owned by your living trust is no longer really yours. Instead, when you create the trust, you will have to name a trustee who manages that property in accordance with the terms you establish. Further, the trustee is not the trust property’s owner, but instead manages it on behalf of beneficiaries. The beneficiaries are the people who get to use worth benefit from the property of the trust controls.
The key point to remember about a living trust, however, is that you will serve as both the trustee and the beneficiary. In other words, you will always be in control of all the property you transfer into your trust.
Parman & Easterday