A living trust is a legal vehicle you can use to transfer property upon your death that avoids probate. If you and your spouse create a living trust together, you need your spouse's permission to change trust terms. After your spouse dies, you can only change the part of the trust that relates to your property.
Living Trust Basics
A living trust is a legal instrument that is easier to understand if you think of it as a water glass. Funding a trust is like adding water to the glass. You can sip water from the glass during your lifetime. Upon your death, whatever water remains in the glass is transferred to the people you name as beneficiaries.
Creating a Living Trust
You create a living trust by completing a legal document. You can ask your attorney to prepare a living trust for you or do it yourself using forms available from reliable online legal service providers. In the document, you must name a trustee to manage the assets and a beneficiary who may use the assets. Most people name themselves as the initial beneficiary. You also name successor beneficiaries who will benefit from the trust when you die. You fund the trust by transferring assets into it.
Changing a Living Trust
One of the great advantages of a living trust is its flexibility. You can revoke or amend a living trust throughout your lifetime. In order to change a living trust, you either write and execute an amendment that is attached to the document or rewrite the entire document with whatever changes you wish, termed a restatement. A living trust becomes irrevocable after the maker's death.
If you create a living trust with a spouse, commonly termed an A-B trust, you can transfer marital property or community property into the trust. In addition, each of you can transfer separate property that belonged to either spouse before the marriage. When the first spouse dies, the trust is split into two trusts, with Trust A containing the property belonging to you and Trust B containing the property belonging to your deceased spouse. You are free to change the terms of Trust A or revoke it entirely, but Trust B is irrevocable and cannot be altered.
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