There are three elements to create a revocable living trust. The elements of a revocable living trust include donative intent, delivery of the property to the trustee, and acceptance by the trustee of his or her duties to administer the trust. It is important to work with and consult with a DC attorney when creating a revocable living trust, in order to ensure that all the elements are met, and that the process is preformed properly.
Generally, the intent to create a trust is evidenced by the creation of the trust agreement itself. Very typically, a trust is in writing and then signed by the initial trustee and as well as the grantor.
Distribution of Assets
Beyond the elements that are required to create a trust, trusts often provide for the lifetime distribution of the trust assets to the grantor, which may include distributions of income or principal as necessary, and whatever is appropriate. The trust will also provide provisions for the distribution or the continued management of the trust upon the death of the initial grantor.
Sometimes on the death of the initial grantor, the grantor will provide that the trust will be terminated and distributed to the beneficiaries. Sometimes assets are maintained in a trust for the benefit of minor beneficiaries or even adult beneficiaries where the preservation of the asset is a goal.
Typically, in those provisions the trust will also provide for the payment of funeral expenses or probate expenses and the payment of the state and inheritance taxes as well. Generally, revocable living trusts usually include provisions regarding the grantor’s reserved power. The grantor generally retains the power to revoke or amend the revocable trust to fund or withdraw any of the trust property throughout his or her lifetime while he or she maintains the capacity to make those changes.
The trust typically also includes trustee powers. Trustee provisions are usually fairly broad provisions and are meant in part to supplement the DC Uniform Trust Code, which also provides a complete list of trustee provisions. It is common for revocable living trusts to include spendthrift provisions. Spendthrift provisions are provisions that prevent a creditor of the beneficiary from attaching to the principal of the trust, and they also generally prohibit a trust beneficiary from selling or assigning his or her interest in the trust to a creditor to another individual.
The trust will generally identify an initial trustee and will also identify successor trustees in the event that the initial trustee is no longer able, willing, or available to act as trustee. It is common for many trustees to waive bond and continue court supervision and it is also common for a trust to include some provisions regarding trust compensation.
Importance of a Lawyer in Preparing a Revocable Trust
The concepts of creating and funding a revocable living trust are very complex. For the initial evaluation, a trust and estate attorney can help determine whether or not a revocable living should be incorporated as part of an overall comprehensive estate plan and whether the inclusion of a revocable living trust would be a benefit to a client.
In addition, an attorney can assist the client with analyzing whether the initial startup cost of a revocable living trust would be beneficial to the client and whether the revocable living trust itself could be a useful tool. In addition to advising on whether or not the use of a revocable living trust would be helpful, an attorney can also advise on the provisions that can be or should be included in a revocable living trust and help draft the trust agreement itself and be sure that it is properly executed and witnessed.
Once the trust is completed, a trusts attorney can also review the assets of a client to determine which assets should be used to fund the trust. An attorney can help provide sample language, simple beneficiary language, to ensure that trust assets are properly funded into the trust. Finally, an attorney can assist with preparing any deeds, if necessary, to transfer real estate into a revocable living trust.