Sometimes people are told that they should do a trust rather than a will because going through probate is expensive and time consuming. Despite what you may have heard, it is not always expensive or time-consuming to go through probate in Vermont. To learn more about other ways to have your property distributed when you die, see our pages on wills and deciding how to distribute property.
A trust is a legal document. It gives control of the assets in the trust to a “trustee” (someone you trust) who manages the assets in the trust. “Assets” include the money, real estate and things that you own. A trustee also distributes your assets after your death without having to get permission from the probate court.
Trusts can be “revocable” or “irrevocable.” A revocable trust can be eliminated entirely or to make a new trust. An irrevocable trust cannot be changed once the trust document is signed.
A trust can be expensive to set up and maintain. You must transfer assets into it. For example, if you want to put your home into a trust, you need to deed your home to the trust. If you want a bank account to be in the trust, you must open an account in the name of the trust and transfer the money in your bank account into the new account. If you receive additional assets after you have funded your trust (for example, if you get an inheritance or you win the lottery) you should transfer those assets into your trust if you want them to be distributed according to the terms of your trust.
Transferring assets into a trust might be a problem if you need long-term care Medicaid. Check the information on our page about Choices for Care - Giving Away Property or Resources.
Revocable or living trusts
A revocable or “living trust” gives control of your assets to a trustee who manages those assets for your benefit during your lifetime. When you die, the trustee distributes those assets according to your instructions. You can change those instructions by having the lawyer who drafted your original trust do it, or by doing it yourself with a trust amendment form and then getting it notarized.
If you want to control your assets until you die, you can name yourself as trustee. Be sure to name a successor trustee so that your assets can be distributed according to your instructions after your death.
Not everyone needs a living trust. You should ask a lawyer or financial planner whether or not a living trust is right for you. Factors to consider in deciding whether you need a living trust include:
- the value of your assets
- the cost of setting up the trust and maintaining the trust
- your wish to keep things private and to avoid probate court
Property that you put into a living trust before your death does not go through probate court. However, this may not matter to you because you may not have to worry about probate court if all your property is held in a way that automatically distributes it after your death.
Special Needs Trusts for persons with a disability
A Special Needs Trust is useful if you want to leave money or other assets to someone who has a disability. It can also be used as a way to handle money from a settlement in a legal case on behalf of a person with a disability.
This kind of trust is especially helpful if getting the money through a will or a court settlement would make the disabled person (sometimes called the “beneficiary”) ineligible for important government benefits such as Medicaid, Supplemental Security Income (SSI) or subsidized housing.
The trustee can be a family member or other third party.
When you consider setting up a Special Needs Trust, it is important to work with an attorney who specializes in these kinds of trusts.
- See our Deciding How Your Property Will Be Distributed at Death page.
- See our Wills page.
- See our Going Through Probate page.
- Visit this page to fill out probate court forms for estates when someone has died.