What Is A Living Trust?

A Living Trust is a document that works for you while you’re alive. The Living Trust is a legal entity that’s separate from you; you’re one entity (that is, you, personally), and the Trust is another. This means the property in the Living Trust belongs to the Living Trust. In order to exist, the Living Trust has to own some property (this is referred to as the Trust being “funded”), so you’ll typically work with your attorney to initially assign your personal property to the Trust. 

Why would you want to do this? The reason is to keep your personal property out of probate. If you were to die and your personal property still belonged to you (personally), it would need to go through the probate process. When it belongs to the Living Trust, however, it won’t need to go through that process.

Thereafter, you would transfer other types of property to your Trust.  For example, you may wish to transfer your real estate, investment accounts, bank accounts, etc., into the Living Trust so that they will not have to go through probate following your death.

While your Living Trust goes into effect immediately, it’s important to understand that you can change the ownership of your property as long as you are alive. You can put items in and take items out of the Trust as needed, and you can modify or cancel it at any time during your life (this is why a Living Trust is also often referred to as a “Revocable Trust”).

After your death, the Living Trust becomes irrevocable. This means it cannot be changed or modified. At that point, your successor trustee (a person you designate prior to your death) will be given full control over the contents of the Trust. He or she will pay outstanding bills, transfer assets to your named beneficiaries, and so on. These tasks will be done in accordance with your last wishes as set forth in the Living Trust document. 

One important benefit of having a Living Trust is that these documents are private. Only on very rare occasions would a Trust need to be filed with the courts, so it will generally not become a public document before or after your death. 

Living Trusts are particularly necessary if you own out-of-state property. If you don't have a Living Trust, the property would likely have to go through probate not only in your current state but also in the state where the property is located. This will be time-consuming, expensive, and stressful for your beneficiaries.

What Is A Last Will & Testament?

A Last Will and Testament is a document that becomes final after death. It can be modified or canceled at any time while you're still alive, but after your death, it cannot be modified.

The personal representative (called an executor in some states) you appoint will fill the role of distributing your estate to your beneficiaries, paying any outstanding bills, filing your final tax return, and managing any other financial obligations on your behalf. However, none of this will be accomplished without the opening of a court proceeding called “probate”. Probate can be expensive, time-consuming, and cause substantial delays in the distribution of your estate to your beneficiaries.

You can find out more about personal representatives here. So, unlike a Living Trust, a Last Will and Testament does go through probate and will become a publicly accessible document after your death.

Why Are Both Documents Necessary?

The final question remains: Do you need a Last Will and Testament if you already have a Living Trust? The answer is yes because if there's anything you haven't remembered to put in your Trust, those leftover assets will be disbursed as indicated in your Last Will and Testament. Thus, what is typically done is that your lawyer will prepare a “pour-over Will” to address the assets you may not have remembered to, or may not have been able to add to your Living Trust during your lifetime.

A simple way to manage this is to talk to your lawyer about a "pour-over Will." This document indicates that anything you own will go to your Trust as the beneficiary. Then, your Trustee will be able to distribute any assets you hadn't already transferred to your Trust, in accordance with the terms of your Trust.  So, the assets that did not ever make it into your Trust prior to your death will still be distributed to the beneficiaries you have designated to receive your assets from your Trust.

Conclusion

You should always work with a knowledgeable attorney to learn about what is needed in your specific situation. If you have a Living Trust, a Last Will and Testament will provide a needed layer of protection for any assets that aren't part of your Trust.

"The information provided herein is simply a brief overview of the Florida law on this particular matter. It should not be relied upon for legal purposes, as the facts and circumstances to any specific legal matter may vary substantially from the limited explanation and application of often complicated legal rules and principles that may be addressed herein, or applicable in your particular legal matter. You should only rely upon legal advice provided to you by a licensed attorney who has had an opportunity to fully evaluate your particular legal matter".