A trust is an arrangement under which one individual, called a trustee, holds legal title to property for another individual, called a beneficiary. You can be the trustee of your own living trust and keep full control over all property held in trust.
A "living trust" (also called an "inter vivos" trust by lawyers who just can't give up Latin) is simply a trust you create while you're alive, rather than one that is created upon your death, under the terms of your will. The beneficiaries you name in your living trust receive the trust property when you die.
In contrast to revocable trusts, irrevocable trusts cannot be revoked or modified after they are signed. Irrevocable trusts can be useful tools for specific goals, like reducing taxes, but they require giving up ownership and control of trust property.
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?
Massachusetts uses the Uniform Probate Code, a set of laws that simplifies the probate process, so making a living trust may be more trouble than it saves.
Massachusetts also has a simplified probate process for small estates (under $25,000). 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 probate with a living trust.
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 neglect or forget to add it to your trust before you die, that property will not pass under the terms of the trust document. In your will, you can name someone to inherit property that you haven't left to a particular person or entity in your trust.
Probably not. Most people do not need to worry about estate taxes because the federal estate tax is levied only on estates worth close to $12 million. Massachusetts does not have its own estate tax.
That said, if your estate is close to $12 million, you may be able to use a more complicated trust (such as an AB trust) to reduce or avoid federal estate taxes.
In Massachusetts, to make a living trust you:
You can use Quicken WillMaker & Trust to make a living trust using your computer. It has a simple interview format that allows you to complete the trust at your own pace, and it gives you lots of legal and practical help along the way. Based on your responses, the program produces a living trust document customized for you and your situation. With Quicken WillMaker & Trust, you can also make a will, powers of attorney, health care directives, and many other useful documents. Use it just for yourself or for your entire family.
For more on Massachusetts estate planning issues, see Massachusetts Estate Planning on Nolo.com.