Preparing to Draft a Living Trust

The most fundamental element of a living trust specifies the date the trust is established and designates the trustee. The grantor is the person establishing or creating the trust and the trustee is the person holding legal title to the trust assets for the benefit of the named beneficiaries.

The first section of a living trust should typically identify the successor trustees. Since you establish a living trust while you are alive, you, as grantor, will usually be the first trustee. Typically, you will identify the events that will trigger the automatic succession of your backup trustee, such as your death or disability. You may want to limit the responsibilities of your successor trustees, as well as set limitations on their powers. For example, you may want to prohibit the trustee from selling the family home without the approval of all beneficiaries. You may also specify accounting requirements for your successor trustee, including annual statements and reports for the beneficiaries.

You should also consider your terms for a successor trustee’s resignation. If your successor resigns, you may name a further backup or allow your beneficiaries to appoint a trustee by unanimous or majority agreement. Fort Wayne, Indiana residents, as well as residents of other states, should consider whether or not to allow beneficiaries to remove a trustee and appoint a successor of their choice.

An important article of a living trust covers your right to add to and remove property from the trust. This flexibility traditionally exists because you and your family members are the beneficiaries while you are living. Any property remaining in the trust at your death will be either held for the benefit of your beneficiaries or transferred to them. It is important to accurately and thoroughly identify each beneficiary and their relationship to you. This is usually the place to also document what happens to property that would have otherwise been distributed to a beneficiary that predeceases you.

Another important article of your living trust concerns the rights that you reserve to yourself as grantor. Most living trusts are revocable and you will retain the right to amend or modify the trust, the right to terminate the trust, and the right to withdraw, mortgage, assign or sell trust assets. Many of these rights may not be preserved in an irrevocable trust. Trusts are complex documents requiring specific wording in order to accomplish your objectives. Therefore, consultation with an experienced estate planning attorney is essential.

Another key article of a living trust will address distributions and payments after you die. Here you can specify whether a beneficiary receives assets outright, or whether they are only entitled to periodic distributions. The timing of these distributions may be tied to specific events such as the beneficiary attaining a certain age or obtaining an educational milestone.

Finally, other articles needed or required to address your specific circumstances and desires can be drafted. Scenarios to consider may include minor children, a spouse who predeceases you, and the possibility that a child of yours may predecease you. In any case, you can consult with me, an experienced estate planning attorney, for assistance in identifying and drafting provisions to your living trust that address your specific needs.