When making Nolo's Living Trust, after you've entered a list of the property to include in your trust, the next step is to say who you want to inherit that property. You can name a beneficiary for each item of trust property separately or name one beneficiary to receive everything.
The beneficiaries you name in your trust document are not entitled to anything while you are alive. You can amend your trust document and change the beneficiaries any time you wish.
Rights of a spouse or child: If you are married and don't plan to leave at least half of what you own to your spouse, consult a lawyer experienced in estate planning. State law may entitle your spouse to claim some of the property in your living trust. In most circumstances, you don't have to leave anything to your children. But if you want to disinherit a child, you should make a will and specifically mention the child in it.
Nolo's Online Legal Forms asks you first whether you want to leave all your trust property to one beneficiary (or more than one, to share it all) or leave different items to different beneficiaries.
The simplest approach is to leave all your trust property to one person or to one or more persons to share. If you choose that option, all you have to do is name each beneficiary and then name an alternate beneficiary for each, who will inherit the trust property if a primary beneficiary does not survive you by five days. (Alternates are discussed below.)
If you choose to leave different items to different beneficiaries, you will be shown a list of all the property items you listed earlier. You can then name beneficiaries for them.
You can name minors (children under 18) to inherit trust property. If a beneficiary you name is a minor or a young adult who can't yet manage property without adult help, you can arrange for an adult to manage the trust property for the beneficiary. Nolo's Online Legal Forms lets you do this after you have named all your beneficiaries. (Property Management for Young Beneficiaries.)
It's very common, and perfectly legal, to make the person you named to be successor trustee (the person who will distribute trust property after your death) a beneficiary as well.
EXAMPLE: Nora names her son Liam as successor trustee of her living trust. She also names him as the sole beneficiary of her trust property. When Nora dies, Liam, acting as trustee, will transfer ownership of the trust property to himself.
You can name more than one beneficiary to share any item of trust property. Always use the beneficiaries' actual names; don't use collective terms such as "my children." It's not always clear who is included in such descriptions. And there can be serious confusion if one of the people originally included as a group member dies before you do.
Obviously, if you name cobeneficiaries for a piece of property that can't be physically divided -- a cabin, for example -- give some thought to whether or not the beneficiaries are likely to get along. If they are incompatible, disagreements could arise over taking care of property or deciding whether or not to sell it. If they can't settle their differences, any co-owner could go to court and demand a partition -- a court-ordered division and sale -- of the property.
Cobeneficiaries will share the property equally unless you state otherwise. We'll ask you, after you enter the names, whether or not you want an item of trust property to be shared equally by the beneficiaries.
EXAMPLE: Georgia wants to leave her house to her two children, Ross and Ryan, but wants Ross to have a three-quarters share of it. She enters their names and then, chooses “unequal shares,” and then enters their interests, in percentages:75% for Ross and 25% for Ryan.
When the children inherit the property, they own it together. But Ross will be liable for 75% of the taxes and upkeep cost and entitled to 75% of any income the house produces. If they sell it, Ross will be entitled to 75% of the proceeds.
If you own property together with someone else, you will name beneficiaries for your share of the property. At your death, only your interest in the property will go to the beneficiary you name.
Pay attention to who will end up as co-owners of the property after your death. If, for example, you and your brother own a house together, and you leave your share to your daughter -- who detests her uncle -- problems are likely.
When you enter a beneficiary's name, use the name by which the beneficiary is known for purposes such as a bank account or driver's license. Generally, if the name you use clearly and unambiguously identifies the person, it is sufficient.