A Step-by-step Guide to Make a Living Trust in Massachusetts

Making a Massachusetts living trust is crucial for individuals. It can help to secure their assets and establish a comprehensive estate plan.

Individuals can gain greater control over their assets by creating a living trust. It ensures a streamlined estate distribution and provides for their loved ones per their wishes.

What is a Living Trust?

Individuals create a living trust to protect their assets and ensure their property is passed on to their chosen beneficiaries. Choosing a trustee is an essential part of making a living trust. A trustee handles the trust property and passes it to the beneficiaries per the trust document.

Why do you Need a Living Trust in Massachusetts?

A Massachusetts living trust can help grantors exercise control over their assets during their lifetime and even after death. By creating a living trust, grantors can ensure their assets are distributed to their beneficiaries on their mentioned terms.

A living trust also helps to avoid the probate process, which is usually costly, time-consuming, and open to public scrutiny. Although Massachusetts law follows the Uniform Probate Code, a living trust helps transfer assets to the designated beneficiaries without going through probate. With a living trust, assets can be transferred to beneficiaries at any time mentioned in the trust.

A living trust also helps grantors when they become incapacitated or unable to manage assets independently. A trustee or successor trustee named in the trust can step in and manage assets in such instances according to the grantor's wishes.

Types of Living Trusts

Revocable Trusts

A revocable living trust provides flexibility to grantors.

With a revocable living trust, grantors are permitted to make certain modifications to the trust and its assets. However, grantors continue to keep ownership of the assets and pay taxes on them as usual.

Irrevocable Trusts

An irrevocable living trust is permanent and does not provide flexibility to grantors.

Grantors cannot remove or make changes to an irrevocable living trust without the permission of all individuals involved in the trust. Making an irrevocable trust implies that the trust owns the assets rather than the grantor. Similarly, taxes on these assets are the trust's duty.

Steps to Make a Living Trust

Decide the Appropriate Type of Trust.

Grantors must decide the type of living trust most suitable for their needs.

For instance, a single living trust is ideal for individual grantors making a living trust in Massachusetts. Couples making a living trust may decide to make a single or joint living trust where individual and jointly owned assets can be added.

Identify Properties to be included in the Trust.

Grantors must assess the properties they own. For example, real estate, investments, jewels, etc., determine what properties should be included in the living trust. Adding as many assets to a living trust as possible is advisable. But, not all assets can be added to a living trust. For instance, retirement accounts have their beneficiaries and cannot be added to a living trust.

Determine a Trustee and the Beneficiaries of the Living Trust.

Making a living trust in Massachusetts requires naming a trustee. The trustee is responsible for handling and distributing the trust property to the beneficiaries, per the trust document.

Grantors can name themselves trustees of their living trust. However, grantors must also name a successor trustee who will handle and distribute the trust assets in the event of the death or incapacitation of the grantor.

In addition, grantors must also decide who should be the beneficiaries of the living trust.

Make and Sign the Trust Document.

After making the necessary considerations, grantors must make the trust document.

Grantors can use online resources or hire an estate planning attorney to draft the document.

Once the trust document is prepared, grantors must sign it in the presence of a notary public.

Transfer Assets and Property to the Living Trust.

Grantors must transfer ownership of their assets and property to the living trust. It establishes the legal connection between the trust and the property.

Transferring ownership may require some paperwork. Consulting an estate planning attorney can be helpful.

Difference Between a Will and a Living Trust

A Will and a living trust are significant estate planning tools that benefit their makers.

Creating a Will can help individuals add instructions like choosing a guardian to care for minor children, appointing a representative to handle property on their behalf, ensuring pet care, etc. Making a Will is also helpful in protecting property acquired after making a living trust.

A living trust can help individuals protect their property, retain control, and ensure a smooth property transfer to beneficiaries on specified terms. It also helps to avoid probate court proceedings, which can be expensive and time-consuming.

Massachusetts Estate Taxes

Massachusetts has its estate tax. Residents may owe estate taxes for estates worth more than $1 million.

Furthermore, the federal estate tax is charged on estates nearing about $12 million for individuals or $24 million for married couples.

Closing Thoughts

Making a Massachusetts living trust allows individuals to take control of their estate planning. Grantors can ensure their assets are managed and distributed according to their wishes.

By creating a living trust, individuals can streamline the distribution process, protect their wealth, and provide for their loved ones following the state's legal requirements.

Through careful assessment of assets, designation of a successor trustee, and proper execution of the trust document, individuals can establish a comprehensive plan that offers peace of mind and financial security.