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Help Guide

This help guide provides a description of the main sections of our joint revocable living trust. Depending on how you answer our questionnaire, some of these sections may not appear in your completed document.

Introductory Language

The introductory language identifies the people creating the trust, called the “grantors.” Typically, grantors of a joint trust are spouses, but they may also be unmarried individuals. The grantors will act as the initial trustees. This means that they will have control over the assets during their lifetimes.

Trust Name

The official name of the trust will include the names of both grantors; for example, the John Doe and Jane Doe Revocable Living Trust. The trustee should refer to the trust using the following format when transacting business on the trust’s behalf: John Doe, as Trustee of The [Grantor’s name] and [second Grantor’s name] Joint [Spousal, if applicable] Revocable Living Trust, dated [month day, year]. Use this official name when referring to the trust in other documents or when transferring assets into the trust.

Purpose

The purpose of the trust is to hold and manage some or all of the grantors’ assets during their lifetimes and to disburse the assets according to their wishes upon their deaths. After the grantors die, the successor trustees named in the trust will take over in managing and distributing the assets.

Funding the Trust

The trust will be funded by transferring the grantor’s assets to the trust after the grantors sign the joint revocable living trust. This means that the assets become owned by the trust instead of the grantors. However, since the grantors are also the initial trustees, they retain control of the assets and are free to use them as they please.

Character of Trust Property

Any property put into the trust will retain its original character as either separately or jointly held property, and if the trust is revoked, the trustee will return all property to its respective owner or owners.

Amendment and Revocation

The grantors can change or terminate the trust at any time during their joint lifetime. If, upon the first death of a grantor, you choose to transfer property to the surviving grantor, then the surviving grantor will retain the right to change or terminate the trust during his or her lifetime. However, if you choose not to transfer property to the surviving grantor, then the deceased grantor’s property will be transferred to a separate trust and will become irrevocable.

Trustees

This section names the initial and successor trustees that the grantors appoint to manage the trust. Trustees are allowed to resign by giving 30 days’ notice to the successor trustee. If the grantors do not appoint themselves as initial trustees, they are still free to remove any trustee during their lifetimes and appoint new trustees.

Bond

This section explains whether the trustees must post a bond. If so, then the trustee must buy insurance to protect against any wrongdoing by the trustee in managing the trust. If the trustee does not manage the trust correctly, then the beneficiaries can file a claim to recover their losses. The bond amount is usually a small fee, and, if required, our trust requires that it be withdrawn from the trust property.

Compensation

When the appointed trustees are individuals, they will not receive compensation for performing their duties. However, any professional trustee service appointed is entitled to reasonable pay for their services. The trust is set up in this way because individuals who are appointed are normally friends or family members who do not expect pay. However, a professional trustee may be appointed if there are no more friends or family able to act as trustee or if the trust ends up being too complex to manage without a professional.

Liability of Trustee

Trustees are prohibited from purposely acting against the wishes of the grantors. However, trustees will not be legally liable if they mismanage the trust as long as they are acting in good faith. This means that they are trying to carry out the grantors’ wishes and perform their duties properly, even if they make mistakes.

Trustee's Management Powers and Duties

Trustees have all rights and powers available under state law to act on behalf of the grantor, including, but not limited to, the power to:

  • sell trust assets; borrow funds; and encumber trust assets, including trust real estate, by mortgage, deed of trust, or another method;
  • manage real estate assets;
  • invest trust assets in any kind of property and any kind of investment;
  • receive additional assets from any source and to manage the additional assets as a portion of the appropriate trust;
  • employ and pay reasonable fees to accountants, lawyers, or investment professionals for assistance or advice regarding the trust;
  • employ and pay others deemed necessary for assistance in administering the trust;
  • deposit and hold trust funds in both interest-bearing and non-interest-bearing accounts;
  • continue and manage any business enterprise of the grantors;
  • vote on grantors’ shares of stock at shareholders' meetings in person or by proxy;
  • institute or defend legal claims regarding this trust or the grantors' affairs;
  • carry insurance coverage for trust property as the trustee may deem necessary;
  • execute any documents necessary to manage the trust; and
  • perform all other acts necessary for the proper management, investment, and distribution of the trust property.

Note that trustees can ONLY use these powers if they assist in carrying out the grantors’ wishes.

Accounting

After both grantors have died, the trustee must provide semi-annual accounting to each adult beneficiary detailing the trust’s activities.

Distributions during the Joint Lives of the Grantors

The trustee or trustees serving while both grantors are living will distribute annually as much trust property as is necessary for the reasonable support, maintenance, and comfort of the grantors. The grantors may change the amount of annual disbursements at any time.

Incapacity of Grantors

If the grantors are also the initial trustees and one grantor becomes incapacitated, then the other grantor will remain as sole trustee. Should both grantors become incapacitated, then the next successor trustee will serve. Here, the term "incapacitated" means the inability to make informed decisions because of advanced age, illness, or other causes.

Basically, each grantor needs to have this minimum level of understanding in order to act as a trustee. If a grantor is able to regain capacity at a later time, then that grantor’s status as trustee will return.

The incapacitated grantor’s healthcare agent under the medical power of attorney will make the decision as to whether the grantor is incapacitated, along with a concurring opinion of at least one physician. If no healthcare agent is available, then the person you name in this section will make this decision.

Death of the First Grantor

The language in your document will depend on what you choose to happen upon the first death of a grantor. If you indicate that the deceased grantor’s property will transfer to the surviving grantor, then your document will reflect that the surviving grantor will retain the right to change or revoke the trust at any time.

If you choose not to select this option, then upon the first death of a grantor the trustee will divide all trust property into two separate trusts, and the deceased grantor’s trust will become irrevocable. This will prevent the surviving grantor from altering the deceased grantor’s trust.

By law, when a grantor dies, the trustee will first need to pay all legally enforceable debts, expenses, and taxes owed by that grantor before trust assets may be distributed to beneficiaries.

Distribution of Specific Gifts

The next section lists any specific gifts from the trust property that the grantors want to be distributed upon their deaths. If you choose for all trust property to be transferred to the surviving grantor, then these gifts will be distributed upon the surviving grantor’s death. If you do not choose this option, then this section identifies the gifts that each grantor wants distributed upon his or her death.

Each gift will name a beneficiary to receive it. If you name co-beneficiaries, then they will divide the property equally. Also, this section names alternative beneficiaries to receive the gift in case the first-choice beneficiaries do not outlive the grantors giving the gift. These assets are also listed under the general trust property.

Distribution of Residuary Living Trust Assets

This important section names the beneficiary that will receive any remaining trust property after any and all specific gifts and child trust funds are accounted for. If you do not want all trust property to be transferred to the surviving grantor, then each grantor’s separate trust will name its own beneficiaries to receive residuary trust assets.

Think of this as a catch-all clause that tells the trustee what to do with any leftover property. Typically, residuary trust property is left to the grantor’s spouse and then any children as alternative co-beneficiaries. Other common beneficiaries include close family and friends or favorite charities.

Children's Subtrust

You can choose to include individual “subtrusts” for the grantors’ children. If included, this section names the intended child beneficiaries. They may be biological or adopted children of one or both grantors. You can also alot trust funds for any children born after the trust is created if you so choose. Any property in the children’s subtrusts will be identified on the attached schedule titled “Child Subtrust Property.”

When both grantors have died, the trustee will maintain the trust funds and make periodic distributions to the children as is appropriate for the care, health, protection, maintenance, education, and support according to their accustomed standard of living.

This section also identifies the age at which each child will no longer be entitled to receive trust distributions. When a child reaches this age, they will receive their remaining share of the trust funds. However, this is not required. Instead, you can choose to have the trustee continue making distributions until the trust funds are entirely withdrawn.

In the event that a child dies prior to receiving their full share, that child’s share will go to their living descendants. If they have no living descendants, then the share will go to the grantors’ living descendants.

Keep in mind that during the grantors’ lifetimes they are free to use the trust funds to support their children since they would still have control over the trust.

Terms of Property Distribution

Each beneficiary you name in the document is required to survive the relevant grantor or grantors by at least 30 days in order to receive property under the trust. If there is no surviving beneficiary to receive a gift, then that gift will go to the beneficiary’s lineal descendants.

Payment to Minors or Incompetents

Trustees have discretion over whether or not to make distributions directly to minor beneficiaries, to their legal guardian, or to withhold payments and invest the funds until the child reaches the age of majority.

Pet Care

If you have pets that you want to provide trust funds for, then this section will name someone to care for the pets after the grantors’ deaths. You should also name an alternative caregiver in case your first choice is unable to serve. Finally, you can provide any additional instructions needed regarding the pets.

Priority of Distributions

In the event that there are not enough trust funds available to fund all gifts declared in the trust, the trustee will attempt to distribute the remaining funds according to the grantors’ known wishes. In this section you can list the priority of the beneficiaries in order to clarify how funds should be disbursed in this scenario.]

Intentional Omissions

If you choose to include this option, then this section identifies any specific people who are intentionally not named as beneficiaries to receive anything under the trust. It is important to list any people who may try to make a claim against the grantors’ property to whom the grantors specifically do not want to give anything. Common candidates are estranged family members and ex-spouses.

Liquidation of the Trust

If the trust funds become so diminished that only small sums remain, then the trustee may decide to distribute the remaining funds in order to avoid ongoing fees or taxes against the trust.

Merging of Similar Trusts

If two separate funds end up benefiting the same beneficiary, then the trustee has the power to merge those trusts in order to make it easier to manage and account for them.

Severance of Trusts

Similarly, if one trust benefits multiple beneficiaries and becomes too complex to administer, the trustee may split it into separate trusts. However, the trustee must still manage the trusts according to the grantors’ original instructions.

Powers Concerning Insurance Policies

The grantors reserve the power to sell or change their insurance policies held under the trust as they wish. The trustee must use their best efforts to collect any amounts due under the insurance policies, but they are not required to file legal claims to recover these amounts unless indemnified against liability.

Spendthrift Provision

This clause prohibits creditors from filing legal claims against a gift prior to that gift being distributed to a beneficiary.

Gifts Given to a Beneficiary during the Grantors' Lifetimes

If the grantors make a gift during their lifetimes outside of the trust that is the same as a gift listed in the trust, then it will be assumed that the grantors did not intend to make the same gift twice. Therefore, the beneficiary will no longer be entitled to the trust gift.

Grantors' Rights to Homestead Tax Exemption

Grantors have the right to occupy their main residences if those homes are held in the trust, free of rent, during their lifetimes. This right protects any state homestead tax exemptions that they are qualified for.

Fiduciary Conflicts of Interest

A trustee is allowed to have a conflict of interest with the trust and transact business with the trust so long as the trustee continues to act in good faith and on reasonable terms.

Notice of Events

The trustee cannot be held liable for mistakes made in good faith when making disbursements to beneficiaries who are no longer entitled to such disbursements. For example, this can occur if the beneficiary’s status changes due to a death or life event. The trustee must still attempt to recover the improper disbursements.

Change of Situs

The trustee is free to move the trust to a new jurisdiction, such as a new state.

Liability for Acts of Predecessors

The trustee may not be held liable for the wrongful actions of any predecessor trustees.

Certificate of Trust

The trustee should sign a certificate of trust in front of a notary public describing certain terms of the trust and use such a certificate as evidence regarding the trust. This will allow third parties to transact with the trust based on the information provided.

Governing Law

This provision names the controlling state law.

Certification of Grantors

The grantors sign and date here in order to certify that they have read and agree with the contents of the revocable living trust.

Notary Acknowledgment

It is recommended that you use a notary to witness the grantors sign. This will act as additional evidence as to the authenticity of the trust if it is ever disputed.

Schedules

Jointly Held Trust Property

This schedule lists all jointly held assets that the grantors are transferring into the trust. Jointly held assets are those owned by both grantors. For married grantors in community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), all property acquired by either spouse during the marriage is automatically deemed jointly held property. In all states, however, assets acquired using the grantors’ joint funds or that have both grantors’ names listed on the title or ownership document are considered joint property.

After signing, the grantors must transfer the title of the assets into the name of the trust. The method of doing this depends on the type of asset. For example, you can contact banks to change the owner of any accounts listed as assets for the trust. File a quit claim deed in order to transfer real estate into the name of the trust. Review the instructions provided with your document for more information on retitling assets.

Separately Held Trust Property

The following two schedules list all the separately held assets that each grantor is transferring into the trust. Separately held property is any property owned by only one of the grantors and which is not considered joint property (see above).

Child Subtrust Property

This schedule itemizes the assets that the grantors want to include in their child subtrust fund.

Notice of Assignment

This notice is used to provide evidence that property has been transferred to the trust. While this notice is not required in all states, it is recommended that you do so in order to avoid any disputes. Include all property being transferred to the trust and use a notary to witness your signing. Complete the notice of assignment again if you transfer additional property into the trust at a later date.

Ready To Get Started? Create a Joint Revocable Living Trust

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Checklist

Step 1: Review Your Living Trust

Thoroughly read your trust document to ensure that it meets your needs. Make any textual edits needed in Microsoft Word or Google Docs.

Step 2: Sign and Notarize

Be sure to sign your trust in front of a notary public.

Step 3: Complete Related Documents

Complete the attached Notice of Assignment and Certificate of Trust. The notice provides evidence that you have transferred trust assets into the name of the trust. States such as New York require this to be completed, and it is a good idea to do so in other states as well. The Certificate of Trust can be used to show financial institutions certain required terms of the trust in order to transact business with them. Have it notarized and make multiple copies for future use.

Step 4: Transfer Property to Your Trust

It is vital that you transfer trust property into the name of the trust. Otherwise, the trust will not be properly funded and the trustee cannot make distributions. Transfer untitled property using the Notice of Assignment (jewelry, art, etc.).

Step 5: Distribute Copies and Add Useful Information

Provide a copy of the completed revocable living trust to the successor trustees. Also, compile any other relevant information that can assist the successor trustees in performing their duties.

Step 6: Periodically Review and Update

You are done! Periodically review your trust to ensure that it continues to meet your needs. Update its terms in order to reflect any changing circumstances or life events. Add and remove trust assets as needed.

Ready To Get Started? Create a Joint Revocable Living Trust