In the process of making plans to protect one’s family and loved ones upon one’s death, many people have chosen a living trust. Also known as an inter vivos (Latin for “within one’s life”), this type of trust is very flexible.This type of trust is distinguished form a testamentary trust, which is created by a will and only comes into effect at the time of the decedent’s death.
Unlike a will, a living trust has the ability to transfer property after the creator’s death while avoiding probate. Note that this is different from a testamentary trust thus invoking—and not avoiding—the probate process.
In New York under the Estates, Powers, and Trusts Law section 7-1.14, any person, natural or otherwise (e.g., a corporation), may create a living trust. A natural person must be at least 18 years old to do so. Any property, real or personal, may be disposed of through a living trust. The creator of a trust is called a settlor, and a living trust is created and effective during his life. In other words, should a settlor so choose, the beneficiary of a living trust need not wait until the settlor’s death to begin benefiting from it.
To execute a living trust, a settlor must to state its terms in writing. A trustee is a person who is appointed in a trust to oversee the distribution of assets within it. One advantage of a living trust is that its settlor may appoint himself to be the trustee. The execution of a living trust need not be acknowledged nor witnessed unless a third person has been appointed as trustee. This enhances the level of control a settlor has over the property transferred to the living trust.
A living trust only governs the property within the trust itself. It is not sufficient for a person to execute a document stating that certain property is considered to be within the living trust—the property must have been actually transferred to the living trust for it to be considered a part of it. Because the property must be unequivocally placed within the living trust to be subject to it, there is no question that the settlor intended for said property to be in the trust.
Unlike in many other jurisdictions, in New York, a living trust is irrevocable by default, unless otherwise stated in writing. So long as the living trust is properly executed, the settlor need not be concerned with having to state terms of irrevocability; it is assumed that the settlor intended the trust to survive, both during life and in death.
As you can see, there are a lot of little requirements of a living trust you need to comply with. In addition, since living trusts avoid probate, judges strictly construe these requirements.