Having a living trust and knowing how to use it

After signing your living trust, you must take some time to know exactly how to use this legal tool.  It's like buying a car - you want to make sure you actually know how to DRIVE the car!  Having a car is great - knowing how to drive it is better!

First, you should realize that you are the creator of the trust. This person is most often known as the "Settlor" (also known as trustor or grantor). You are also the initial "Trustee" of your own living trust. The people who take over when you cannot be the trustee anymore are known as your "successor trustees." You are also the initial "beneficiary" of your own Trust. At some point, while you will always be the creator of your living trust, you will not always be the trustee and you certainly will not always be the beneficiary of your own Trust.  When you can no longer handle your own affairs, your named successor trustees will take over (in the order that you have designated them). Also, after you pass away, your assets will pass to those designated as beneficiaries of your living trust. 

During your lifetime, it's business as usual and you are in control of your living trust and all the assets in the name of your living trust. The trust is revocable and amendable during your lifetime. Consider it a "stand by" vehicle that helps you avoid the court system not only while you are living but also upon your death. 

Whether or not your living trust helps you avoid the probate process depends on whether or not you actually take the time to re-title your assets in the name of your trust. Many people create a living trust but never re-title their assets. Also, while some people do take the time to re-title their assets, they forget to put later acquired assets in the name of the trust. If you refinance your real estate, make sure you re-title the property correctly. Don't depend on the mortgage company or lender to do this for you. At the very least double check!

Having a living trust is helpful. Knowing how it works and learning how to use it is a very helpful exercise to undertake.  A living trust doesn't have any magical properties.  You need to understand how it works and how to best utilize it.