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Which type of property do you wish to include in your Living Trust? Which type of property do you wish to include in your Living Trust? Real Estate Financial Accounts Ownership of Business Personal PropertyLast Update September 13th, 2024
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Table of Contents:A Living Trust is a legal form that places your assets into a legal entity (a trust) to then be easily distributed to your heirs at the time of your death [1].
There are two types of Living Trusts:
A Revocable Living Trust is the most commonly used of the two types of documents. The reason is that it is created while you are living and can be modified at any moment, whereas an irrevocable trust cannot be modified or ended after it is created.
A Living Trust is beneficial to your heirs, such as family members and close friends. Your heirs can avoid having to go through the probate process thanks to the document.
It also allows you to be in control of your funds and assets, whether you are in good health or not.
There are other common names that a Revocable Living Trust can be called, such as:
Easily create your document in minutes with our Living Revocable Trust template.
Knowing how to write your Living Trust Form correctly is crucial, Even in simple states, missing details or errors can lead to confusion or disagreements when needed.
Firstly, it is essential to understand the parties involved in a Living Trust document [2].
Once you know who the parties will be in the document, you must follow these steps to create your Living Trust:
Doing this allows your trustee or successor trustee to manage the assets in your trust according to your instructions. If or when you pass away, your assets will easily be distributed to your beneficiaries.
If you create a Revocable Living Trust, you can also choose another important estate planning option: the pour-over will.
A pour-over will is used with your Living Trust to transfer any probate assets or personal property not part of the Trust into the document when you pass away. This type of will also allows you to designate a guardian for minor children, which a living trust cannot do.
Creating a Living Trust is not always straightforward. There could be some disadvantages to creating this type of legal document.
However, any liability does not outweigh the advantages in the vast majority of cases, especially for complex estates.
Review the advantages and disadvantages of a Revocable Living Trust below.
| Advantages | Disadvantages |
|---|---|
| Beneficiaries can avoid the costly process of probate proceedings | Needs to be reviewed each year |
| You can modify it at any moment | You must still pay for the assets; no creditor protections |
| Distribution of assets will be simple | Real property and assets need to be re-titled/re-registered after making the trust document |
States have specific laws regarding how Living Trusts can be made. The majority of states have added some part of the Uniform Trust Code to their own legislature [3].
You can find your state’s laws regarding Living Trusts below.
| State | Law |
|---|---|
| Alabama | § 43-8 |
| Alaska | § 13-16 |
| Arizona | § 14-3 |
| Arkansas | § 28-4-40 |
| California | § 15-2 |
| Connecticut | § 45a-471 |
| Delaware | § Title 12, Part 4 |
| District of Columbia (Washington, D.C.) | § 19-1301.01 |
| Florida | § 42-731-735 |
| Georgia | § 53-5 |
| Hawaii | § 30a-560 |
| Idaho | § 15-3 |
| Illinois | § 755 ILCS 5/, 6-7 |
| Indiana | § 29-1 |
| Iowa | § 15- 633 |
| Kansas | § KS Chapter 59 |
| Kentucky | § 394–395 |
| Louisiana | § 2421-2425 |
| Maine | § 18-C |
| Maryland | § Title 5,101-804 |
| Massachusetts | § 2-2-190B |
| Michigan | § 701-713 |
| Minnesota | § 524 |
| Mississippi | § 91-7 |
| Missouri | § 31-473 |
| Montana | § 72-3 |
| Nebraska | § 30, 30-333 |
| Nevada | § 136 |
| New Hampshire | § 56, Chapter 552 |
| New Jersey | § 3-17 |
| New Mexico | § 45-3 |
| New York | § 3-2 |
| North Carolina | § 28A-2a-b |
| North Dakota | § 30.1 |
| Ohio | § 21- 2101-2131 |
| Oklahoma | § 58 |
| Oregon | § ORS Chapter 113 |
| Pennsylvania | § 20-31 |
| Rhode Island | § 33-7 |
| South Carolina | § 62- 3-3 |
| South Dakota | § 29A-3 |
| Tennessee | § 32-2 |
| Texas | § 1 & 2 21.001 |
| Utah | § 75-3 |
| Vermont | § 14-3 |
| Virginia | § 64.2-2 |
| Washington | § 11-11.20 |
| West Virginia | § 41-5 |
| Wisconsin | § Chapter 851 |
| Wyoming | § 2-7 |
One way to ensure that you do not leave any key information out of your Living Trust is to review an example.
It’s always a good idea to review an example before creating any type of legal contract or form.
Look over the following sample Revocable Living Trust to understand how your document should be outlined and the key information that it must include to achieve your estate planning goals.
There are similar documents that you can use when you are planning out the distribution of your assets.
You can also use these similar legal forms to plan for any eventuality regarding your health, property, and guardianship of minors.
Have a look at these other popular estate planning tools:
There are concepts regarding the creation of Living Trusts that may be confusing. You may have doubts about whom to add and what the benefits and regulations of the document are.
If that’s the case, look over the following answers to the most asked questions about Living Trusts.
The person who creates the Revocable Living Trust, the grantor, remains the owner of the property that is included in the trust.
Even if you transfer the title of your property to the trust, your assets and trust income will still be recognized as yours.
This also means that you will still be taxed if any of your trust property earns any income, even if it is part of the Living Trust.
Living Trusts are not public records. This remains the case even after the death of the grantor.
There are only a few individuals who will have complete access to the documents of the Revocable Living Trust.
The parties listed in the trust such as the trustee and successor trustee will have access to all the information. Accountants and beneficiaries may also have access depending on the circumstances.
In very rare cases, a Living Trust could be made public if it needed to be used in a court case.
Depending on whether you would like to create a Revocable Living Trust individually or with a partner, the cost could vary greatly.
Typically, people go to an estate planning attorney to make the trust agreement document; however, this is usually expensive. For an individual Living Trust, the cost could be as high as $5,000, and for a couple, the expense may be up to $8,000.
Take advantage of our Revocable Living Trust template to create your own estate plan document and skip the large fees.
Arguably the most important pieces of information you must include in your Living Trust are the assets.
The assets you should include in the Recoverable Living Trust are:
You can also include other personal belongings in your trust fund that your trustee or successor trustee should manage. Financial or legal advice may advise you not to include retirement accounts in your trust, due to the complexity of transfer and possible tax consequences. However, you can make a beneficiary designation for the trust as a beneficiary for these and other types of assets that designate beneficiaries (retirement plans, life insurance policies, health savings accounts, etc.).
Listing your assets along with your trustee and beneficiaries will be essential, so you know exactly who receives them in the event of your death. Just remember you must transfer assets into the trust fund as part of this estate planning process.
You are only a few steps away from your own Living Trust Form!
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This Revocable Living Trust Agreement (referred to herein as the "Living Trust Agreement" or the "Agreement") is entered into by I, _________, the Settlor, of _________, Alabama, (the "Settlor"). This Revocable Living Trust will be known as "The _________ Revocable Living Trust".
Trust Purpose
1) The Settlor desires to create this Revocable Living Trust to be held, administered, and distributed for the benefit of the Beneficiaries by the Trustee following the death of both of the Settlor. However, the Settlor's interests shall have priority over the interests of the Beneficiaries during such Settlor's lifetime.
The primary goal of this Living Trust is to protect the value of the Property herein transferred to the Trustee. The secondary goal is to generate income and economic growth for the Beneficiaries of this Living Trust.
Trustee
2) If the Settlor does not become incapacitated, such Settlor will serve as the Acting Trustee and the primary Trustee (the "primary Trustee") under this Living Trust Agreement.
3) If the Settlor dies or becomes incapacitated, the Acting Trustee of this Living Trust shall be _________ of _________, _________, (the "Successor Trustee"). If the Settlor ceases to be considered incapacitated, such Settlor shall recover the authority to manage this Living Trust.
a. Any heir or issue of those beneficiaries that is entitled to a benefit under this Living Trust in the place of any then deceased beneficiary.
Ownership of Property
4) The Settlor owns the property (the "Property") described in Schedule A of the Agreement.
Assign and Convey Property to Living Trust
5) The Settlor, _________, may have or will assign, grant, transfer, or convey and deliver all the rights, title, and interest in the Property in the manner described in Schedule A of this document as a gift, to be held by this Living Trust.
Amendment During the Settlor's Lifetime
6) Unless the Settlor is incapacitated, the Settlor has the power from time to time, during the lifetime of the Settlor, by a duly acknowledged, written instrument, and subject to the provisions of the Agreement, to alter, amend, modify, or restate any of the provisions of the Agreement on delivery to the Successor Trustee. Further, the Settlor may change the number and identity of the Settlor, the primary Trustee, the Successor Trustee, or the Beneficiaries. Lastly, the Settlor may have property added to this Living Trust, as well as sold or withdrawn from such Living Trust.
Revocation During the Settlor's Lifetime
8) Unless the Settlor is incapacitated, the Settlor has the power from time to time, during the lifetime of the Settlor, by a duly acknowledged, written instrument and subject to the provisions of the Agreement to revoke or terminate any of the provisions of the Agreement on delivery to the Successor Trustee. If such revocation were to occur and following payment of all debts and expenses attributable to the Living Trust, the remaining Property will revert to the Settlor.
Distributions During the Lifetime of the Settlor
10) The Acting Trustee shall distribute to the Settlor the income and principal of the Living Trust as requested by the Settlor. Further, the Acting trustee shall have the authority to make payments or have money withheld out of the resources of this Living Trust if the Settlor is incapacitated and is unable to manage their affairs.
Distributions Upon Death of the Settlor
11) Following the death of the Settlor, the Acting Trustee shall distribute the remaining property as directed in this provision after paying all debts and complying with all the obligations of such Settlor.
12) The Settlor has designated specific gifts (the "Specific Gifts") to be distributed before the distribution of the residue of this Living Trust. Any specific Gift that is no longer part of the Living Trust shall be void. Until all debts of the Settlor are paid and until all the obligations of such Settlor are satisfied, no Specific Gift shall be distributed. The Specific Gifts shall be distributed as follows:
a. 100 Shares to the following beneficiary:
_________ of _________, _________.
13) If any minor is a Beneficiary at the time of the Final Distribution, then the Acting Trustee may, at their sole discretion, hold the Share of any Minor Beneficiary in a separate trust under the same terms and conditions of this Living Trust. Further, the Acting Trustee shall invest the Shares, and pay income or capital as such Acting Trustee deems advisable for the support, education, and benefit of the minor Beneficiary until such minor Beneficiary reaches the age of Majority. After such minor reaches Majority, the Acting Trustee shall pay or transfer the rest and residue of said Shares to the Beneficiary.
This notwithstanding, the Acting Trustee may also, at their sole discretion, pay or transfer all capital, assets, and property of the amount remaining of that Share to any parent, custodian or legal guardian of the Minor Beneficiary. Further, in managing said Share, such Acting Trustee shall follow the same terms and conditions of this Living Trust. Lastly, receipt by that parent, custodian, or legal guardian shall discharge the Acting Trustee's duties and obligations.
14) If there is an Adult Dependent Beneficiary among the beneficiaries of this Living Trust at the time of the Final Distribution, the Acting Trustee may, at their sole discretion, hold the Shares of any Adult Dependent Beneficiary in a separate trust under the same terms and conditions of this Living Trust. Further, the Acting Trustee shall invest the Shares, and pay income or capital as such Acting Trustee deems advisable for the support, education, and benefit of the Adult Dependent Beneficiary.
This notwithstanding, the Acting Trustee may also, at their sole discretion, pay or transfer all capital, assets, and property of the amount remaining of those Shares to any parent, custodian or legal guardian of the Adult Dependent Beneficiary. Further, in managing said Shares, such Acting Trustee shall follow the same terms and conditions of this Living Trust. Lastly, receipt by a parent, custodian, or legal guardian of the Adult Dependent Beneficiary shall discharge the Acting Trustee's duties and obligations.
15) If the Settlor is/are not survived by any of the Beneficiaries by at least thirty (30) days but said Beneficiaries are survived by an heir or issue who survives the Settlor by at least thirty (30) days, then the Shares or the Specific Gift designated for that deceased Beneficiary shall be distributed per stripes among the surviving heirs or issue.
If the surviving heirs or issue of the deceased beneficiary are minors, the Acting Trustee shall have the authority to pay or transfer all capital, assets, and property attributable to those minor heirs or issue to the parent, custodian, or guardian of those minor heirs or issue. Under such authority, the Acting Trustee shall act subject to the same terms and conditions of this Living Trust. Lastly, receipt by that parent, custodian, or legal guardian shall discharge the Acting Trustee's duties and obligations.
16) If the Settlor is/are not survived by any of the Residual Beneficiaries by at least thirty (30) days and said beneficiaries do not leave an heir or issue who survives the Settlor, then that Beneficiary's Shares shall be distributed among the surviving residual Beneficiaries in the same proportions as provided in the Final Distribution.
17) If the Settlor is/are not survived by all of the successor Beneficiaries by at least thirty (30) days and do not leave an heir or issue who survives the Settlor by at least thirty (30) days, then all of the remaining property in this Living Trust shall revert to the estate of the Settlor.
18) If, at the time of the Final Distribution, there is real property that must be distributed as part of this Living Trust and such real property is subject to a mortgage, the Beneficiary shall take that property, including the mortgage. The Real Property Beneficiary shall not pay the mortgage from the remaining assets or the residue of this Living Trust.
19) If, at the time of the Final Distribution, there is personal property that must be distributed as part of this Living Trust and such personal property is subject to encumbrances or liens, the Beneficiary shall take that property, including all of its encumbrances and liens. The Personal Property Beneficiary shall not resolve or pay out the encumbrance or lien from the remaining assets or the residue of this Living Trust.
Trustee Bond
20) Subject to the laws of the State of Alabama or of any applicable jurisdiction, no bond or other security shall be required of any Trustee appointed in this Living Trust.
Trustee Liability
21) The Trustee shall not be held liable by the Settlor, this Living Trust, or its Beneficiaries for any loss or harm to this Living Trust resulting from the Trustee's performance, except for cases of gross negligence, reckless indifference, or willful misconduct, in carrying out the purposes of this Living Trust or in the protection of the interests of the Beneficiaries. A Trustee shall only be responsible for their acts. A deceased, resigning, or removed Trustee shall not be discharged from their outstanding liabilities.
Trustee Death or Resignation
22) If the Settlor is not dead, a Trustee may resign to any remaining Trustee and Qualified Beneficiaries, if applicable, by giving at least 30 days' notice to the Settlor. If a Trustee were to die, that Trustee's role as a Trustee shall terminate at the time of their death.
Removal of Trustee
23) The Qualified Beneficiaries may, following the death of the Settlor, remove a Trustee for any reason they deem necessary. However, the Qualified Beneficiaries shall take such a decision unanimously.
24) If the Settlor dies or becomes incapacitated, a Trustee or Qualified Beneficiary may file a petition to remove a Trustee in a court of competent jurisdiction. Further, a court of competent jurisdiction may also remove a Trustee on its own initiative.
Trustee Replacement
25) If the Settlor is not dead or incapacitated and a Trustee can no longer act as a Trustee as a result of death, resignation, or any sort of inability to act in such a role, the remaining Settlor may appoint a replacement if such Settlor is alive and not incapacitated.
26) If the Settlor is dead or incapacitated and a Trustee has been removed, died, resigned, or can no longer act in such a role, then the Acting Trustee shall appoint a replacement Trustee if such Acting Trustee deems it necessary. The replacement Trustee shall be appointed through the approval of the majority vote of all remaining Acting Trustees with the authority to act under this Living Trust.
27) If the Settlor is dead or incapacitated and the Living Trust no longer has a Trustee, the Qualified Beneficiaries shall appoint a replacement Trustee through a unanimous vote.
Trustee Powers
28) The active Trustee shall have the following Powers under this Living Trust:
a. The Trustee shall manage the property under the same obligations and with the same rights as if the Trustee were the owner of the property.
b. Following the death of the Settlor, the Trustee shall have the power to appoint one or more Trustee to act as co-Trustee if it is deemed necessary and in the best interest of this Living Trust.
c. The Trustee shall have the authority to hire legal counsel, accounting services, and all other services deemed necessary to manage the property in the best interest of this Living Trust.
d. The Trustee shall have the authority to repair, improve, exchange, retain, insure, repair, sell, or dispose of any personal property belonging to this Living Trust, without liability for loss or depreciation, if such Trustee deems it necessary and if it is in the best interest of this Living Trust.
e. The Trustee shall have the authority to administer, manage, invest, exchange, mortgage, lease or rent, sell, dispose of, or give options regarding any real property belonging to this Living Trust. The Trustee shall also have the authority to insure, repair, improve, or add to any real property belonging to this Living Trust if such Trustee deems it necessary and if it is in the best interest of this Living Trust. The Trustee shall have the authority to do any act herein stated without liability for loss or depreciation.
f. The Trustee shall have the authority to maintain, continue, dissolve, change, or sell any business which is part of this Living Trust if it is in the best interest of this Living Trust. The Trustee shall also have the authority to purchase any business on behalf of this Living Trust if such Trustee deems it necessary and if it is in the best interest of this Living Trust.
g. The Trustee shall have the authority to generate income or growth by purchasing, maintaining, converting, and liquidating investments or securities without liability for loss or depreciation. The Trustee shall also have the authority to vote stock in person or by proxy, and exercise any option concerning any investments or securities, if the Trustee deems it necessary and if it is in the best interest of this Living Trust.
h. The Trustee shall have the authority to open or close bank accounts if it is in the best interest of this Living Trust.
i. The Trustee shall have the authority to generate income and growth, without liability for loss or depreciation, by reasonably investing the assets of this Living Trust if such Trustee deems it necessary and if it is in the best interest of this Living Trust.
j. The Trustee shall have the authority to hold unproductive property and cash in a checking account, free from investment, if it is in the best interest of this Living Trust.
k. The Trustee shall have the authority to lend funds only if the borrower provides sufficient collateral and if the loan is in the best interest of this Living Trust.
l. The Trustee shall have the authority to borrow funds, take mortgages, and encumber assets belonging to this Living Trust if the loan is in the best interest of this Living Trust.
m. The Trustee shall have the authority to undertake judicial and nonjudicial settlements, abandon petitions, sue or defend, or deal with any claim, if it is in the best interest of the Living Trust.
n. The Trustee shall have the authority to combine cash and property in any contribution made during the Final Distribution. The valuation and selection of property done during the course of the Final Distribution shall be binding on all Beneficiaries and made in accordance with the discretion of the Trustee.
29) As Fiduciaries, the Trustee shall act in good faith and in the best interest of the Living Trust.
30) All decisions taken and made in good faith by the Acting Trustee, regarding the management of this Living Trust, shall be binding on all parties.
31) The Trustee is also granted any powers and elective rights conferred by state or federal law beyond the powers and authorities granted under this Agreement. Further, the Trustee may exercise these powers and rights when required.
Trustee Compensation
32) Any Trustee who is not a Beneficiary of this Living Trust shall be reasonably compensated out of the resources of this Living Trust for services rendered as a Trustee. Further, any Beneficiary serving as a Trustee under this Living Trust shall not receive any compensation under this Living Trust.
Trustee Expenses
33) A Trustee shall be reimbursed out of the income and property of this Living Trust for any expenses incurred in the management of this Living Trust, if the expense is reasonable.
Spendthrift Clause
34) Until the Final Distribution is made, only the Trustee shall be authorized to sell, assign, or encumber assets of the property held by this Living Trust. No Beneficiary of this Living Trust shall have that authorization. Similarly, the right of distribution that any Beneficiary holds under this Living Trust agreement shall not be subject to judicial encumbrance before the Final Distribution by the Acting Trustee.
Tax Identification
35) This Living Trust will be identified by the Settlor's Social Security Numbers for all tax purposes. The Acting Trustee shall apply to the IRS any necessary tax identification numbers, such as an EIN, immediately following the death of the Settlor.
Homestead Tax Exemption
36) If this Living Trust holds the principal residence of the Settlor, then such Settlor may possess and inhabit the property without any obligation to pay rent. The purpose of this provision is to provide the Settlor a beneficial interest in the residence, secure their possessor rights in such residence, and ensure that the Settlor may be eligible for a state homestead tax exemption for which they may qualify.
Vote of Minor or Adult Dependent Beneficiaries
37) If there is a Minor Beneficiary or Adult Dependent Beneficiary and the Qualified Beneficiaries are required to vote, consent, or decide with regard to an act under this Living Trust, then the parent, custodian, or guardian of that Minor Beneficiary or Adult Dependent Beneficiary shall take the place of said Minor Beneficiary or Adult Dependent Beneficiary in their best interests.
Termination of Trust
38) This Living Trust shall terminate if the Property of this Living Trust is exhausted through distributions.
39) If it is concluded by the Acting Trustee that the value of the Property is not sufficient to cover the cost of administration of the Living Trust and the aggregate value of the Property is less than $50,000.00 (USD), then the Acting Trustee may terminate this Living Trust after notifying the Qualified Beneficiaries of such fact. If this Living Trust is terminated under this section, then the Acting Trustee shall distribute the Property as stated in this Living Trust.
Abstract of Trust
40) An abstract of this Living Trust (the "Abstract of Trust") may be executed by the Acting Trustee. The Acting Trustee may use this "Abstract of Trust" to provide use of the existence of this Living Trust to a financial institution. The person presented with an "Abstract of Trust" shall be held harmless for relying on the "Abstract of Trust".
Governing Law
41) This Living Trust shall be governed, construed, and interpreted under the laws of the State of Alabama.
Severability
42) If any clause or term of this Living Trust is held to be unenforceable or invalid as a matter of law, all other provisions of this Living Trust shall remain in effect to the fullest extent permissible under the governing law of this Living Trust.
Definitions
43) For this Living Trust, the following definitions will apply:
a. "Trustee" means any Primary Trustee or Successor Trustee, as well as any replacement or additional Trustee appointed for this Living Trust.
b. "Acting Trustee" means any Trustee serving as a Trustee of this Living Trust.
c. "Adult Dependent Beneficiary" means an adult beneficiary that is not able to manage their financial affairs because of mental or other disability.
d. "Incapacity" or "Incapacitated" means that a person is not able to manage their affairs because of a mental disability or other disability.
e. "Age of Majority" means the age of majority of the jurisdiction where a beneficiary ordinarily resides.
f. "Minor Beneficiary" means a beneficiary under the legal Age of Majority.
g. "Qualified Beneficiary" means any beneficiary entitled to a benefit under this Living Trust.
IN WITNESS WHEREOF, the parties hereto have signed their names on this ________ day of ________________, ________, in _________, Alabama, declaring and publishing this instrument as the Grantors' Living Trust.
