A trust is an arrangement under which one person, called a trustee, holds legal title to property for another person, called a beneficiary. You can be the trustee of your own living trust, keeping full control over all property held in trust.
A "living trust" (also called an "inter vivos" trust by lawyers who can't give up Latin) is simply a trust you create while you're alive, rather than one that is created at your death under the terms of your will.
The main advantage of making a living trust is to spare your family the expense and delay of probate court proceedings after your death. But do you really need a trust?
Virginia does not use the Uniform Probate Code, which simplifies the probate process, so it may be a good idea for you to make a living trust to avoid Virginia's complex probate process.
Virginia has a simplified probate process for small estates (under $50,000). If your net worth will be under this amount when you die, the probate process will be straightforward and relatively inexpensive, so you may not need to worry about avoiding it.
Yes, you always need a will. A will provides a backup plan for any property that doesn't make it into your trust. For example, if you acquire new property and don't add it to your trust before you die, that property won't pass under the terms of the trust document. You can use a will to name someone to inherit property that you haven't left to a particular person or entity in your trust.
If you don't have a will, any property that isn't transferred by your living trust or other method (such as joint tenancy) will go to your closest relatives as determined by Virginia state law.
It depends on the kind of trust you create. A simple probate-avoidance living trust has no effect on federal estate tax. However, more complicated living trusts, such as an AB trust, can reduce the federal estate tax bill for people who own a lot of valuable assets. (Most people, though, don't need to worry about federal estate tax because it affects only estates worth more than $5 million.) For more information on when you still might want to use an AB trust to reduce estate taxes, see Nolo's article Tax-Saving AB Trusts.
To make a living trust in Virginia, you:
Nolo's Online Living Trust can create your living trust document for you. Our simple interview asks some questions about you and your property, and based on your responses, our trust document is customized for you and your situation, complying with the laws of your state. Nolo's Online Living Trust is easy to use and thorough -- and you can make changes for a full year following purchase. For more information, see the Online Living Trust FAQ.