Online Living Trust FAQ

In this article I will address the online living trust questions I get asked the most in my law practice.

Question #1 - What is a living trust?

A Living Trust is a separate entity that is created to own and manage property. The creator of the trust, the Grantor, is typically also the trustee, person in control, and the main beneficiary, in most cases with the spouse and any minor children. The primary purpose of making a living trust is that, unlike a will, property that passes through your trust does not have to go through probate after your death. This will save a great deal of time and expense for your family. During your life you, as the trustee, have complete control over the property in your trust. When you die, the person you named as "successor trustee" passes your trust property to the people you named as beneficiaries.

Question #2 - Do I need a living trust?

This is the most frequent online living trust question I get. If you own property such as a home or financial accounts in a bank, having a trust is a very good idea. It will allow you to avoid probate, which may save your family time and money. Probate is a public court process that transfers property owned by one person alone at their death. It can take more than a year and cost thousands of dollars.

Question #3 - Can I do an Online Living Trust

Yes, an online one can be a good choice if you get options and an education about the process. I recommend staying away from forms that are a one size fits all because you may not be that size. Look for products that teach you how and allow you to draft your own trust and supporting documents. In addition community education classes or online e-courses are good resources to learn more about the living trust.

Question #4 - Are there drawbacks to using a living trust?

We are big proponents of the Revocable Living Trust at our law firm. This is the same whether I am preparing the documents for clients or it is an online living trust. There are two main drawbacks however. First is the cost. If you have an attorney prepare a revocable trust for you expect to pay thousands of dollars.

The second drawback is the work you must do to fund the trust. This can be a great deal of paperwork. You will need to either transfer title of your assets or change beneficiary to the trust. In some cases such as with cash value life insurance you may do both. Drafting the trust itself is the same amount of work as drafting the Will. But with the Will you would rarely change title of your assets. If you fail to change the title or beneficiary of the asset to the trust this asset may, depending on how it is currently titled, go through the probate court process and the main reason for creating the trust, avoiding probate, is lost.

Even though I make my living from drafting trusts for clients, I suggest that if your total estate value is less than the federal estate tax threshold of $3.5 million and any lower threshold imposed by your state you do it yourself. The living trust is in most cases the best way to plan your estate and using an online living trust product can save you thousands of dollars. We suggest that you do it yourself and let us help you.  Sign up for our free living trust e-course to learn how.