SouthCoast Estate Planning – The Living Trust Quiz

What is a Living Trust

In its most simple terms, a trust is a legal arrangement under which one person who is called the “trustee” holds the legal title to property in the trust for another person who is called the “beneficiary.” When there’s a written trust document, the trustee has to “follow the rules” contained in the trust agreement and manage the trust property for the benefit of the beneficiary or beneficiaries.

A “living” trust is simply a trust you create while you’re alive—thus it’s called a “living trust.”

Living trusts can do all sorts of things including helping you to avoid the Probate Court, reduce your estate taxes, and even protect assets from creditors.

Living trust documents don’t have to ever become public (unlike a Will).

And one of the best things about certain types of revocable living trusts is that you can be your own trustee and your own beneficiary, while still retaining the power to revoke or amend the trust at any time while you’re alive and competent.

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People often wonder whether they really need a living trust, so we’ve created this easy test to help you make your own decision.

Children under 18 cannot own property or assets in their own name, but when they turn 18 they become legal adults. If you were to die before your minor child turns 18, then they wouldn’t be able to own your property outright, but as soon as they turn 18, the courts will turn over all of that property to them and let them spend it how they see fit. If you don’t want your minor children inheriting sums of money and real estate before they’re mature enough to manage it, then a living trust will ALLOW YOU to designate the age or ages at which you want your children to have unfettered access to your money.
Having corporate shares of stock or membership interests in your own small business in your personal name could require your surviving spouse to file your estate in the Probate Court just to get control over your business. The business could be left in turmoil with no clear control causing it to quickly lose its market value. A living trust can actually help your business avoid a financial crisis in the event of your death or incompetence because your family could avoid the time and expense of Probate Court and keep your business running during a time of crisis.
Massachusetts has a very low threshold of only $1 million dollars when someone who dies will owe inheritance taxes. Even though a surviving spouse can inherit all your property without paying estate taxes, that’s not true when your surviving spouse then dies with more than $1 million. A living trust, that is properly drafted, can help save tens of thousands of dollars in inheritance taxes. Wouldn’t you rather give your wealth to your family than to “Uncle Sam?”
If you’re in a second marriage having an estate plan is absolutely critical because of the stage you’ve reached in life. This is especially true if you’re in a blended family which usually has many unique challenges that couples in first marriages typically don’t face. If you’re in a second marriage you may have children from a prior marriage and you may have children from this second marriage. Remarried partners usually have property from the first marriage that they bring into the second marriage and they may want those assets to go to their own children rather than to step-children. At the same time, the second marriage spouses usually want to make sure that the surviving spouse will have enough to live on until they die, but they may have different goals about how any remaining assets are split between all the kids. Certain types of specialized living trusts can help you accomplish these goals while at the same time allowing the kids from a prior marriage to not be accidently or intentionally disinherited.
Many children with special needs or some disability, whether adult or minor, receive valuable governmental benefits on which they and the family rely. Eligibility for these benefits is often based on financial need. If you leave your special needs child an inheritance through a simple Will, you could jeopardize their governmental benefits and cause them to spend their inheritance away. A “special needs trust” used as part of your estate planning can help preserve these valuable benefits.
Remember that a trust is a legal arrangement under which you appoint a “trustee” who holds the legal title to your property in trust for another person who is called the “beneficiary.” When you have a medical condition that might leave you unable to manage your own financial affairs, you can actually be the beneficiary of your own living trust that is managed by a trusted person whom you’ve already chosen to act for you in this time of crisis. The beauty of the living trust arrangement is that your trustee will not have to obtain Probate Court permission to act with your financial best interests in mind. And, with a living trust, your financial information remains completely private. With Probate Court involvement, you don’t get that kind of privacy because there’s a public record created.
Probate Court proceedings are public records and if you die with just a simple Will and no living trust, anyone can actually go down to the County Courthouse and actually look in your Probate file to see all your financial and family information that is recorded there. With a living trust, however, the person you’ve named as your “successor trustee” (i.e., the person who takes over running the trust after you die) will take over the management of the assets seamlessly without Probate Court involvement and your financial affairs will remain private – this is particularly valuable if you have minor children who will be the beneficiaries of your trust after you’re gone.
A second home or investment property in another state could require your heirs to file an “ancillary probate” case in that state which will add more time, expense and lawyers to settle your affairs. A living trust into which you place that out-of-state property can help your heirs avoid that situation.

Living Trusts and Your Situation

Making your decision about whether to create an estate plan centered around a living trust comes down to your personal concerns and what you’d like to achieve.

If you’ve answered “Yes” to any one of the questions in this quiz you may be a good candidate for a living trust.  Every life-situation is unique, however, and it’s important for you to consult with an experienced estate planning lawyer whom you can trust.

If you’re ready to begin getting your living trust started, book your Family Legal Planning session with us today.


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