What is a living trust template?

A living trust template is a generic trust instrument. These documents are sold for a variety of uses such as estate planning tools to avoid the expense of probating an estate, to remove property from the reach of creditors or to minimize taxes. Be warned that states have various requirements for creating a VALID trust document. A trust that is valid in California or Florida may not be valid in Massachusetts. To hold title to real property in Massachusetts a trust must conform to Massachusetts law. Therefore, generic trust documents downloaded from the internet are extremely unreliable. The legal problems that can result from these generic trusts can be extremely costly.

A common example is a document that allows the trustor to declare himself the trustee and the beneficiary during his life and then names a successor trustee who will distribute the property after the trustors death. These trusts have become very common and are invalid.

In the example provided above there was no trust created. When the same person is the trustor, trustee and the beneficiary, any property transferred to the "trust" remains in the estate of the "trustor". Upon the death of the trustor-trustee-beneficiary the estate must be probated. If the "trust" was used for tax purposes during that "trustor's" life there may be taxes and penalties owed.

Another problem frequently seen in generic trusts is the failure to provide all the necessary provisions for the trustee to deal with the property. There are examples where a trust was created and the property was transferred to the trust. However, the trust failed to grant the power to sell the property to the trustee. Therefore, once the property went into the trust there was no means by which it could come back out. In other cases the trustee has died and the trust fails to make provisions to appoint a successor trustee. In those cases, the interested parties must hire an attorney and petition the court to make the necessary modifications to the trust so the property can be transferred to the beneficiaries or sold.

When contemplating the transfer of property to a trust you should consult an attorney who is knowledgeable about trust law in your state.