An inter vivos trust, commonly referred to as a living trust or a revocable living trust, is an estate planning tool almost everyone can use. The great benefit about an inter vivos trust is that it allows you to largely skip the probate process. Probate can take up a lot of time and money as your estate representative makes sure that all the steps required under New York law are met. To avoid this time and expense, people create an inter vivos trust to transfer property outside of probate after they are gone.
Yet living trusts are not something you can create and then forget about. It takes a little effort to get the most out of your living trust. Inter vivos trusts also require you to carefully manage trust property. Talk to your estate planning attorney for complete advice about properly using an inter vivos trust, but until then, consider the following pointers.
An empty inter vivos trust is a useless trust.
A living trust isn’t like a will in that, once you write the document, you can simply store it in a secure place and be confident that it’s still useful. In order to get the most use out of your living trust you have to create it and then ensure you fund it properly. Funding an inter vivos trust means taking some of your property and transferring it into the trust’s name. Until you effectively transfer your property, the living trust is an empty and practically useless tool.
A good trust is a well-documented trust.
Trusts exist only on paper. They are essentially legal fictions that allow you to do some things you otherwise couldn’t. So, keeping accurate documentation is essential if you want to get the most out of your trust. A good place to start is the trust inventory. The inventory keeps a list of all the assets the trust owns. Anytime you buy or sell trust property, you need to keep that inventory updated. You will also need to keep meticulous records about any transactions involving trust property.
Trusts are only as good as the trustee who manages them.
Most people who create an inter vivos trust serve as their own trustee. In some situations, you might choose to hire a professional trustee to manage your trust and keep it going, but most people don’t go this route. As trustee, it’s your duty to manage trust assets, invest them, and do everything else you would expect a professional manager to do. If you find yourself unable to keep up with these tasks, you might need to consider hiring someone else to do the job for you.
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