Wondering what you should name your living trust?
- Wondering what you should name your living trust?
- So What Should You Name Your Living Trust?
- Do I Need a Trust?
- How to Choose a Trustee for Your Living Trust
- Important Things to check when reviewing your Living Trust
A friend asked me just this week: “If I create a revocable living trust for all my assets, what do I call my trust?”
It used to be the accepted practice that your family name should be a part of the name of your living trust. So John Black would have the John Black Living Trust. All assets held by the Trust would be titled in that name.
That means that the deed to John Black’s residence would say that the owner is John Black, Trustee of the John Black Living Trust, under Trust dated January 15, 2022, for example. The same would be the case with John’s bank accounts, C.D.s, investment accounts, limited liability company membership interest, and all other assets.
However, the practice has changed over the past decade or so. Now with the prevalence of identity theft, it is recommended that you don’t use your family name in the name of your trust.
So What Should You Name Your Living Trust?
For example, John Black might now choose a trust name that means something to him but does not include his family name. John likes apples or owns an apple orchard. His trust might now be called “The Red Apple Living Trust, under trust dated January 15, 2022.”
This won’t totally preclude a chance of identity theft, but it makes it one step more removed, and hence a little bit more difficult for the thief. This now seems to be of major benefit to the trustee.
The banks, title companies, investment houses, and others have no problem with this. The reason is simple. With your trust, you now must have a “Trust Certificate” which identifies the name of the trust, the trustee, the named successor trustee, and the trustee’s powers, with other pertinent information. The trust distribution details and other pertinent information need not be revealed or divulged.
So “what’s in a name?” What should you name your living trust? Whatever you wish it to be — within reason.
Do I Need a Trust?
Often I am asked, “Do I need a trust?”
Here’s who needs a living trust:
- If you have children or
- If you have assets that total more than $50,000,
- If you have real estate such as a house. Even if you don’t have equity in it right now, that can happen pretty quickly.
A trust will bypass probate and the goal is to do just that. It also makes it very clear what your intentions are.
Questions such as
- who should be in charge of watching out for my kids,
- who should be in charge of distributing money
This can also be accomplished by having a will. But if a will is the only thing you have in place when you die, you are going to have to go through probate.
A probate proceeding is a legal proceeding where somebody has to go into court before a judge and have everybody who wants to make a claim against that probate estate make it.
It takes a while to go through. It may take anywhere from four months to a couple of years or more and it really can be a mess.
It can also be very expensive because there are professionals that need to be hired.
Do I need a trust? Absolutely, if you have more than $50,000 in assets, if you have a house, or if you have children you want to make sure they are looked out for properly. I have done this for my clients and saved them the expense and trouble of a long, drawn-out process of being in probate.
I can set that up and tell you whether you need it or not. We are here to make the right determination and recommendation for you.
If it is not time yet, if you have a very small family, if you don’t have real estate yet, maybe you could wait a while. But it doesn’t cost that much to do a trust and it should be looked into.
How to Choose a Trustee for Your Living Trust
Your living trust is much more than just a will that says which heirs get what percentage or which specific items that you leave behind should go to whom. A living trust details how and when heirs are to receive their inheritance, who is to take over any businesses in question, and many crucial issues of your estate. A living trust is very specific in how an estate is to be dealt with. Therefore, the choice of a trustee for your living will is a very important decision in your estate planning process.
Living Trusts: Choosing a Trusted Friend
When choosing a person to be the trustee of your living will, you need to answer the question:
- Who could step into my place and confidently act as I would in carrying out my wishes?
It is vitally important to choose someone in that you have full faith and confidence. You should feel at ease that he or she would carry out your requests as they are written in your estate planning documents. Some typical choices include:
- Close family friend
- Close family member
- Trusted nephew or niece
While you may feel completely secure in trusting this huge responsibility for carrying out your wishes to a family member, there are several situations when that is not wise or possible. In that case, your estate planning wishes can be addressed by a trusted outsider.
Living Trusts: Choosing an Outside Trustee
If you do not have a close friend or relative that you feel comfortable leaving this job to, or if by selecting one of the heirs will cause conflict, then there are other options. You can hire an outside trustee like:
- Your bank
- A trust company
- Your lawyer
- A financial advisor
These professionals are well versed in what it requires to be a trustee and can often work more expediently and effectively, which saves the heirs money and time. While there are many benefits to not having a family member involved as the trustee of your living trust; there are also some drawbacks to using a bank or trust company as your trustee.
- Higher fees
- Minimal estate value of around $700,000
No matter whom you choose, you want to be sure that you have full confidence in them to do exactly as you want, no matter what other people say. There may be heirs who are unhappy with the terms and conditions of the living trust and will try to sway your representative to do as they want. Knowing that you have a strong, trustworthy individual protecting your wishes will provide peace of mind.
Important Things to check when reviewing your Living Trust
1) Living Trust: Beneficiaries
There is an article in your Living Trust titled “Beneficiaries” or “Beneficial Interests” that sets apart who you have named to receive your trust assets. It could reflect a percentage interest your beneficiaries should receive, or perhaps it is to be divided equally. Take a careful look at this article. Is this how you would like your trust assets to be distributed?
2) Living Trust: Successor Trustee
Your Successor Trustee and Alternate Successor Trustee are listed in your trust documents. Check to make sure the people you have listed are still alive, in good health, and still your first choice(s) to execute your trust.
3) Power of Attorney
Your Power of Attorney should be updated within the past 2 years to comply with changes in the law. If you have a Power of Attorney that is signed prior to January 2009, it is time to get it updated. Also, check to make sure your Power of Attorney Agents are still the people you would choose and trust to make financial decisions for you (or to pay your bills for you).
4) Living Will with Medical Health Care Powers
Your Living Will should also comply with changes in the law. If your Living Will is signed before January 2009, it is time to get it updated. Also, check the Medical Agents you have listed to make sure they are the people you would have to make medical decisions for you if you are unable to.
5) Trust Asset Schedule
Your Trust Asset Schedule is located behind the tab marked “Schedules.” This is a listing of all the assets you have in your trust. It should include any new accounts or investments you own. If something is missing on your Trust Asset Schedule, you can go ahead and add it yourself. This Schedule is one of the ONLY documents you may write on or cross things off in your Trust Book. Do not write on your other documents…if you do, it could invalidate your whole trust. If you feel more comfortable having us update your schedule for you, give us a call.
So that’s all there is to a quick Trust Review. On average, it only takes about 10 minutes to make sure everything is exactly as you would have it.