A living trust is a useful tool.
Your estate plan needs a trust.
Perhaps this is because you need to avoid an estate tax, whether at the state or the federal level.
Maybe you have irresponsible heirs or heirs who are minors.
Perhaps you simply want to avoid probate.
According the a recent Yahoo! Finance article titled “How to Create a Living Trust in Tennessee,” setting up a trust requires planning, professional assistance, and follow through.
How do you start?
List your assets.
To know what needs to go into your living trust, you need to flesh out your assets.
Some assets, like 401(k) plans and IRAs, cannot be included in your trust.
Other assets may be transferred to a trust, but doing so may be unnecessary.
They already avoid probate through pay-on-death accounts or beneficiary designations.
On the other hand, business interests and real estate are ideal for trusts.
Know your living trust options.
What are they?
The first is a “revocable” trust.
With this option, you can transfer assets out of the living trust and change its terms.
You can even cancel the trust if you decide you know longer want it.
The second option is a “irrevocable” trust.
Assets cannot be removed and the trust cannot be revised or canceled.
Are you single?
You may choose a single trust.
If you are married, you may opt for a Tennessee Community Property Trust.
What does this do?
It allows you to co-own property, so you do not have to divide or assign ownership to specific assets.
This is not a good fit for all marriages.
If you have children from a former marriage or marry later in life, then this option just might get you into trouble.
Name a trustee.
What does a trustee do?
The trustee manages your living trust.
If you select a revocable trust, you can serve as your own trustee.
You could also arrange to serve as co-trustees with your spouse.
Should you do this, name a successor trustee to take over should you become incapacitated and when you die.
Set up a trust agreement.
Do not attempt this alone.
It must be done properly or the living trust is invalid.
If this happens, there may be taxes, penalties, and additional costs.
Work with an experienced estate planning attorney to avoid this.
Sign and notarize the trust document.
If you do not do this, your plan is ineffective.
Transfer property into the trust.
The trust can only manage or protect what titled to the trust.
Consequently, you will need to retitle assets to the trust now or later on via beneficiary designations (e.g., life insurance proceeds).
By following these steps, you will have a living trust in place to accomplish your estate planning goals.
Reference: Yahoo! Finance (September 27, 2019) “How to Create a Living Trust in Tennessee”