How to Read a Living Trust

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Trusts are private documents that assign property for the benefit of another. The major benefit of creating a trust is that, unlike a will, it avoids publication through probate court processes, keeping the details of property distribution private. Trusts also can avoid tax consequences, such as estate taxes. Living trusts are created prior to the death of the person creating the trust, the settlor. The living trust may be revocable or irrevocable during the life of the settlor. Reading a trust document is not difficult. However, certain information within the trust is significant, and readers should keep those points of information in mind as they analyze a trust document.

Step 1

Identify the people involved with the trust arrangement. The various players have specific titles. The first is the trust settlor or the person assigning his property to the benefit of another. Trustees are the individuals assigned to manage the property for the benefit of a third person, and beneficiaries are those for whom the trust was created. Identifying these individuals should go beyond merely noting names and contact information. Relationships between the individuals also can be important. For example, if someone challenges the trust's validity, relationships of the individuals may bring to light conflicts of interest or inappropriate assignment of a trustee, such as a convicted felon.

Step 2

Note the property placed into trust. The property that is subject to a trust document is sometimes called the "res." A settlor only may put into trust property for which he currently has a vested interest. Coupling the property noted in the trust document with other documents pertaining to the property, such as deeds and titles, will help determine if the settlor has the authority to place the property in a trust.

Step 3

Determine the intent of the trust. Trusts are set up for various reasons, many of which may not be obvious. However, when disputes arise, lawyers and courts try to construe the documents in a way that meets the original intent of the settlor. Intentions of a settlor may not always be obvious. It is this piece of the analysis that allows the most flexibility and interpretation. When a trust fails or is challenged, courts will always try to continue the trust in a way that honors the intent of the settlor, including reassigning the beneficiary of a trust. For example, if a living trust created a benefit to a non-profit organization that later folds and the settlor has since died, the court may assign a similar non-profit organizations as the beneficiary.

Step 4

Readers of living trust documents also should pay attention to whether the trust is revocable, meaning it can be canceled during the life of the settlor, or irrevocable. Some states require that a living trust indicate whether the trust arrangement is revocable or irrevocable. The status of revocability is important because it gives the reader a sense of whether the trust can be expected to last indefinitely.

Step 5

Consult an attorney. Estate planning is a complicated area of law. Anyone seeking guidance interpreting and analyzing a trust document should consult an attorney licensed in his jurisdiction.


About the Author

Joshua Jones began writing in 2003. He has published serial fiction on ezines, penned scholarly legal articles, and contributed online to the School Shootings Anthology. Jones holds a Bachelor of Music Education, University of Montevallo, a Master of Education Law and Juris Doctor from the University of New Hampshire School of Law, and a master's degree from McGeorge School of Law.