A living trust is one of the most important estate planning tools you can ever create. Done right, it can protect your estate from costly and time-consuming probate, ensuring that your hard-earned assets pass down to your loved ones according to your wishes.
However, to serve its intended purpose, it is important that you get every aspect of the living trust right. Here are important steps you need to take when creating a living trust.
Identify the assets you want to include in the trust
It helps to start by knowing what you are going to include in your trust. Create an inventory of the assets in your name so you are sure you can account for everything. While at it, keep in mind that certain assets, like your insurance and retirement accounts, cannot be included in a trust document as these assets are directly transferable upon death.
Get the paperwork in order
Before finalizing the trust creation process, you need to be sure that everything named in the document is linked back to the trust rather than your name. If you have included an asset like a property in the trust, be sure to transfer its deed to the trust as well.
Identify the parties in the trust
The three major human components in a trust are the settlor, the trustee and the beneficiaries. All must be clearly named in the trust document. Additionally, the trust document must be signed in accordance with California trust laws.
Once you have identified the parties in your trust document, you need to go ahead and draft the document that outlines the terms of the trust. Find out how you can create a trust document that reflects your wishes.