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The person who creates the trust, i.e., the trust maker. A married couple may create a trust together and both would carry this title in the document.

The trustee is the person who holds legal ownership (title) rights to assets held by a Living Trust. Generally, the trust maker is the trustee during lifetime. For married couples, the surviving spouse typically continues as the sole trustee until his or her death or incapacity. Since the trustee retains all rights to ownership, the trustee is the signer on all trust accounts and is recognized by financial and real estate/title companies as the responsible person for buying, selling, leasing or managing assets. Therefore, the trust maker does not relinquish legal control of the assets funded into the Living Trust because the trust maker is named as the original trustee of the Living Trust.

A successor trustee is named in the Living Trust document as the replacement for the original trustee, either because of incapacity, resignation or death of the original trustee. The successor trustee acts like an executor under the will and assumes responsibility for paying bills and taxes, controlling assets and distributing inheritances to beneficiaries named in the Living Trust. The successor trustee also acts as the manager of assets and payer of bills for young or inexperienced beneficiaries until whatever ages have been set out in the trust for those beneficiaries to receive their inheritances directly, without further restrictions. Two or more persons may be named as first choice for Successor Trustee and then are called "co-trustees." When co-trustees are named their unanimous decision-making may be required, depending on state law or terms of the trust. While it may not be uncommon for a married couple with two children to name both as successor co-trustees, providing their children equal legal control over their inheritances, naming co-trustees should be considered carefully in order to avoid unintended delays in trust administration.

When beneficiaries named in a Living Trust are minors or financially inexperienced, a continuing trust should be provided for each of such identified beneficiaries. It is not uncommon, for example, to require that a beneficiary must attain age twenty-five or thirty before an inheritance is distributed to such beneficiary (particularly the children of a trust maker). Until the beneficiary attains the age chosen by the trust maker, the named beneficiary is entitled to benefit from the assets retained in his or her trust, which assets are controlled by the successor trustee. Payments from the beneficiary's separate trust are authorized for the beneficiary's health, support, maintenance and education. Choosing an age for distribution to beneficiaries may depend on the candidates available to act as successor trustee until the beneficiary reaches the age selected. A trust maker may be more comfortable choosing an older age of distribution to beneficiaries when there are trustworthy candidates for successor trustee, such as close family members, who will exercise complete legal control of the beneficiariary's assets until the age specified in the Living Trust.

A trustee, whether the original or successor trustee, holds broad powers in controlling and managing trust assets, including, powers to buy and sell assets, borrow, loan, mortgage, lease, vote securities, resolve claims by or against the trust, hire and litigate, all with unrestricted access to trust assets. However, the trustee exercises such powers on behalf of the beneficiaries as a "fiduciary" and is bound to act in a prudent manner. Since Living Trust documents typically provide for waiver of a bond for the trustee, choosing a successor trustee involves a decision regarding the perceived honesty of the person to be named in the trust. If there are any doubts in that regard, it is prudent to consider an institutional or bonded trustee, subject to a thorough background check of the proposed professional trustee.

Initially, the trust maker is the person entitled to use or consume the trust assets. For married couples joining in one Living Trust together, the surviving spouse typically is the only beneficiary until his or her death, although each trust maker is entitled to name beneficiaries other than a spouse. Upon the death of the trust maker, the beneficiaries named in the trust, usually children, family members, friends or charities, are entitled to receive or consume the assets of the Living Trust. Although children are named as beneficiaries in a Living Trust document, as "successive beneficiaries" they gain no additional legal rights until the death of the trust maker

A Living Trust is called a revocable trust because the trust maker is able to change the terms of the trust, or revoke the trust entirely. Upon the death of the trust maker, the terms of the trust can not be changed and at such time the trust may become an irrevocable trust. Depending on the type of trust form selected for a married couple, the entire Living Trust may be amended or revoked after the death of the first spouse (Simple Trust or Disclaimer Trust) or part of the trust attributable to the deceased spouse may become irrevocable at the death of the first spouse (A-B or Marital Trusts and the disclaimed portion of the Disclaimer Trust).

A person who is able to make his or her own financial or personal decisions is said to have "capacity" and a person who is not able, either because of mental or physical constraints, is incapacitated. In a Living Trust, the trust maker names a person to assume control and managment of Living Trust assets on the trust maker's behalf, in the event the trust maker is determined to be incapacitated, thereby avoiding a court process called a "Conservatorship" (or adult "Guardianship"). The person named to assume control and management of such assets is either the original co-trustee, such as the spouse, or the successor trustee, who is the same person named to assume control of trust assets after the death of the trust maker. It is common for the Living Trust to define when a trust maker will be determined to be incapacitated, usually by reference to the opinions of physicians, as well as to authorize health providers to discuss medical information with the person named as co-trustee or successor trustee for that purpose (known as a "HIPPA" waiver).

A Living Trust holds title to assets that have been transferred to the trustee of the Living Trust either by a change to a title document, an assignment or through beneficiary designation. It is extremely important to fund the Living Trust with a trust maker's probate-type assets, in particular real estate (the residence and other properties), bank accounts and brokerage accounts. There are some assets that do not get transferred to a Living Trust during the trust maker's lifetime, such as retirement or deferred income accounts, and beneficiary designations may identify the trust as the beneficiary under specific factual situations (in most cases, the surviving spouse is named as first beneficiary for a retirement plan account).

As explained above, a Living Trust document replaces the traditional will for identifying beneficiaries of the trust maker's assets and for naming the person(s) responsible for carrying out the trust maker's instructions. Since utilizing a Living Trust to transfer assets at death is a relatively new technique (not easily accomplished until the early 1970's), a traditional will may be more commonly used in some states for naming beneficiaries and the executor. Therefore, a person should make either a Living Trust or a traditional will, but not both. See Pour-Over Will below for further description.

When a Living Trust is selected instead of the traditional will, a "pour-over" will is included in an estate plan for ensuring the coordination of an estate plan through the Living Trust document. The pour-over will names the Living Trust as the beneficiary for any assets not funded into the Living Trust during the trust maker's lifetime, such that those assets are said to "pour over" into the Living Trust after the trust maker's death. These assets added to the Living Trust are administered under the terms of the trust. A pour-over will does not avoid probate. A distinct set of rules apply to determine if the assets that must pour over into the Living Trust will go through the probate process or if the transfer of those assets to the trust can occur through another statutory procedure, such as the Small Estate Affidavit procedure in California.

The "springing power" may be utilized as the type of Power of Attorney for Financial Management for estate planning purposes in that such power does not take effect unless the maker, called the "Principal," is determined to be incapacitated. In other words, if the Principal is unable to make his or her own financial decisions, commonly determined by two physicians, then the Power of Attorney authorizes the Agent identified in the document to make financial decisions and to control the Principal's assets, but only for the benefit of the incapacitated Principal. This Power of Attorney form applies only to assets that are not funded into the Living Trust, such as retirement plan holdings, and is a companion to the Living Trust document which names the successor trustee to assume control of trust assets if the trust maker, as original trustee, is determined to be incapacitated. An "immediate" Power of Attorney for Financial Management may be utilized as an estate plan document, but usually is limited to naming spouses as Agents or is selected after careful consideration since it may be uncommon to name another person to control the Principal's assets while the Principal is still able.

The document utilized to name an Agent to make health care decisions for another person, called the "Principal," goes by different names but has the same function- i.e., this document authorizes health care professionals, such as doctors and hospital personnel, to communicate with the Agent about choices to be made for a patient's health care. In most cases, the Agent interacts with health care providers because the patient is unable to do so. The purposes of these forms are twofold: 1. to name an Agent to make decisions of behalf of the Principal; and, 2. to provide directions to the Agent in making those decisions. The most extreme decision this document allows the Agent to make is to discontinue artificial means of prolonging the Principal's life. These forms also allow for burial and funeral instructions as well as the Principal's intention relative to organ donations.

A Living Trust is utilized to reduce the cost and time delay involved in transferring assets to beneficiaries after a property owner's death, which very often involves real property such as a residence. In order to effectively implement a Living Trust estate plan it is imperative that the legal title to real property be changed from the name(s) of the individual(s) owner(s) to the name of the Living Trust. A Trust Transfer Deed or Quitclaim Deed is the document used to change title of real property to the Living Trust. It is not uncommon to name the orginal trustees as well as the Living Trust in the Quitclaim Deed so that the former individual owners are identified as new trust owners, for example, "John Smith and Mary Smith as Trustees of the Smith Family Trust." Since the former individual owners retain the same legal ownership rights they had before establishing their Living Trust, there is no change in true ownership rights when the legal title is changed over to the Living Trust (as a device to avoid probate).

This document allows the trust maker to state his or her intention that the Living Trust should also contain the tangible personal property items which very often do not have title documents to prove ownership of such assets, such as jewelry, works of art, furniture and household effects.

It is important to keep a current listing of Living Trust assets so that the successor trustee may locate all estate assets. Schedules are provided for that purpose as well as to evidence the trust maker's intent that the Living Trust owns the assets listed. The trust maker's intent to transfer title to his or her assets to the Living Trust may become an issue if the title documents held by the financial institution do not reflect Living Trust ownership, perhaps due to mistake by the trust maker or financial institution.

In order for beneficiaries to avoid an expensive and time-consuming probate court process, a Living Trust must be funded properly. In addition to current funding issues, such as changing title for real property, bank accounts, stock and brokerage accounts during the trust maker's lifetime, a trust maker may need to address post-death funding issues. For example, a Living Trust may include provisions for a continuing trust in order to control inheritances for minor children or financially inexperienced adults. In such cases, assets that were not funded into a Living Trust during the trust maker's lifetime, such as retirement plan accounts or life insurance policies, may need to be funded into the Living Trust after the trust maker's death. Typically, an estate plan includes such trust funding instructions in a separate letter for the trust maker.

This joint trust is used by a married couple to provide the surviving spouse with absolute control over all trust assets after the death of the first spouse. This trust may be described as the replacement for "reciprocal wills," where each spouse named the other spouse as the primary beneficiary (i.e., husband leaves all of his assets to wife if he dies first and wife leaves all of her assets to husband if she dies first) and then to common beneficiaries upon the death of the second spouse (for example, to the couple's children). The Disclaimer Trust leaves all of the deceased spouse's trust assets to the surviving spouse, who is given the power to “disclaim” all or any part of those assets. While disclaiming assets normally would mean foregoing the benefits of those assets disclaimed, Disclaimer Trust provisions allow the surviving spouse to retain the benefits of the disclaimed assets, with some restrictions. Due to federal estate tax rules, this fiction of the surviving spouse disclaiming assets but at the same time retaining beneficial rights in the assets, allows the couple to utilize the deceased spouse's federal estate tax exemption amount ($1 million) in order to pass the assets disclaimed to successive beneficiaries, such as the couple's children, after the death of the surviving spouse. The use of the deceased spouse's assets by the surviving spouse through a trust, according to specific federal estate tax rules, is similar to the A-B Trust form, discussed below; however, the Disclaimer Trust form provides flexibility in tax planning after the death of the first spouse rather than at the time of making the trust. The reason to provide flexibility, in most cases, is to measure the need to avoid the federal estate tax impact upon the death of the second spouse while preserving the federal income tax benefit to the successive beneficiaries through the “step-up” in tax basis. Generally speaking, it is more advantageous to make this determination after the death of the first spouse rather than the earlier date of making the trust before the death of the first spouse.

The Disclaimer Trust provides flexibility for tax planning in weighing the need for the A-B Trust form after the death of the first spouse, against the goal to make the "step-up" income tax benefit more available to successive beneficiaries for combined estates of less than $1 million. This trust form also gives the surviving spouse unrestricted rights in the deceased spouse's assets and does not provide successive beneficiaries with a vested (future) interest in those assets.

The Disclaimer Trust provides the surviving spouse with the unrestricted ability to change the terms of the trust, most specifically to change the beneficiaries designated by both spouses at the time of making the trust. If the surviving spouse does not make the “disclaimer” within the requisite period of time, generally not later than a nine month period (and possibly shorter under state law), the successive beneficiaries may pay more federal estate tax because the federal estate tax credit exemption amount will be lost (i.e., the deceased spouse's shelter of up to $1 million) if needed after the death of the surviving spouse.

• The Disclaimer trust most likely is suitable for a married couple with only children from the same marriage since a child from a prior marriage may not be a common beneficiary for both spouses, particularly after one of the spouse's dies.
• While utilizing the Disclaimer Trust may be appropriate for any range of a married couple's wealth, since there is estate tax planning flexibility provided as long as the surviving spouse acts expeditiously within the statutory time period after the first spouse's death, it may be uncommon to use this type of trust if the combined net worth of the couple exceeds the single federal estate tax credit exemption amount (currently $1 million).
• The Disclaimer Trust most likely is not appropriate for a couple where either or both spouse(s) has a child from a prior marriage, since the deceased spouse can maintain more control over his or her assets, and more likely ensure that his or her share of the trust ultimately will be distributed to the deceased spouse's beneficiaries, after the death of the surviving spouse, by using the A-B Trust form.
• The Disclaimer Trust probably is not appropriate for a couple without children or for a couple where either spouse has any concern about leaving his or her share of the trust to the surviving spouse without maintaining a level of control sufficient to ensure distribution to the beneficiaries of his or her choice after the death of the surviving spouse.

An A-B Trust form, which also includes the Marital Trust form (A-B-C Trust), is utilized to provide some element of control over the part of the trust attributable to the first spouse to die or for federal estate tax planning purposes. Until the federal estate tax exemption credit was set on a schedule to increase over several years to its current $1 million level, the A-B Trust form was utilized by many middle class families where the projected combined values of a couple's assets could exceed $600,000 (the credit exemption amount for a lengthy period prior to 1998). With the increase of the exemption credit amount to $1 million, and the availability of the Disclaimer Trust form providing flexibility for estate tax planning purposes, the A-B Trust form may not be the best choice for a married couple, when considering the possible loss of the income tax benefit called “step-up” in an asset's income tax basis. The A-B Trust form provides for an automatic division of Living Trust assets upon the death of the first spouse into the surviving spouse's share (typically the “Survivor's Trust”) and the deceased spouse's share (typically the “Residuary Trust” or “Bypass Trust”). The surviving spouse continues to own the assets of the Survivor's Trust without restrictions, and the Survivor's Trust may be amended to change beneficiaries or revoke; whereas the Residuary Trust assets typically are controlled and used by the surviving spouse (limited generally to “health, support, maintenance and education” for estate tax planning reasons) but the beneficiaries named in the Living Trust can not be excluded as successive beneficiaries of the Residuary Trust assets. When the Marital Trust form is utilized (A-B-C Trust), the excess of the value of the deceased spouse's assets above the credit exemption amount ($1 million) is transferred to a Marital Trust rather than to the Survivor's Trust. The Marital Trust form provides the maximum level of control over the deceased spouse's assets in that the Marital Trust portion of the trust becomes irrevocable so that the surviving spouse can not change beneficiaries, although the surviving spouse generally continues to use Marital Trust assets for her “health, support, maintenance and education.” The Marital Trust form may also be used whenever one of the spouse's is not a citizen of the United States and the value of assets of either spouse exceeds the current federal estate tax exemption amount (“QDOT Trust”).

The use of the A-B trust form ensures the best possible federal estate tax position for a married couple in that the automatic division into subtrusts upon the death of the first spouse will preserve the federal estate tax credit exemption amount for such spouse's share of the trust, thereby providing for the possibility of doubling the credit exemption amount from $1 million for the surviving spouse to up to $7 million for the couple. The A-B Trust form also provides the maximum amount of control a deceased spouse can exert when the deceased spouse's assets are left for use by the surviving spouse, both as trustee and beneficiary, in that the deceased spouse's beneficiaries can not be eliminated from their future shares for that part of the trust.

The division of A-B Trust's assets is automatic upon the death of the first spouse, which may result in an unnecessary loss of “step-up” in the income tax basis of the assets funded into the Residuary Trust (or Bypass Trust). Trust assets typically appreciate over time so that the appreciation of Residuary Trust assets will be subject to federal income tax if the beneficiaries sell those assets after the death of the surviving spouse, whereas that appreciation in the deceased spouse's share of trust assets would not have been subject to federal income tax if there had been no division into the Residuary Trust, because the value of the combined estates for the married couple did not exceed the single credit exemption amount at the time of the surviving spouse's death.

• The A-B Trust form probably is not appropriate for a married couple with children from their marriage only when the combined asset values, including life insurance, likely will not exceed the then single federal estate tax credit exemption amount ($1 million) and neither spouse is concerned about leaving absolute control over his or her share of the trust to the surviving spouse (for example, where neither spouse suspects that the other as surviving spouse will be influenced to include other beneficiaries or exclude a beneficiary the couple will agree on when they make the trust together).
• The Marital Trust form (A-B-C) most probably is appropriate when either or both spouse(s) have a child or children from a prior marriage. While the couple may agree that all children are the couple's common beneficiaries at the time of making the trust, and perhaps all children are named as beneficiaries in the trust, there is less certainty the children from a prior marriage will not be excluded after one of the spouses dies than if they were all children from the marriage together. This trust form provides more certainty that the deceased spouse's beneficiaries will not be excluded from inheriting from the deceased spouse's share of the trust since that portion of the trust attributable to the deceased spouse becomes irrevocable at that time and cannot be changed by the surviving spouse (who can only change the beneficiaries as to his or her Survivor's Trust share of the trust).
• The A-B Trust form may be more appropriate if the net worth of the married couple more likely than not will exceed the single credit exemption amount ($1 million) at the time of the surviving spouse's death, particularly when the excess of over such amount ($1 million) is significant. For example, when the couple's wealth is double the single exemption amount (i.e, $7 million), the use of the A-B Trust is appropriate due to the estate tax savings that will be recognized through the creation of two subtrusts (the A and the B trusts) upon the death of the first spouse. This type of trust is also appropriate for any couple where the wealth of the couple likely will exceed the single estate tax exemption amount and there is some level of doubt the surviving spouse will act in a timely manner to consider estate tax planning following the death of the first spouse under the Disclaimer Trust rules.

Drafting a will or Living Trust to provide percentage shares of estate assets for beneficiaries tends to provide a result more consistent with the giver's intent than does specific allocation of assets on hand when the estate plan is transcribed. Except in situations where a specific asset has special meaning or purpose for a beneficiary, such as jewelry, a business interest or residence, providing for percentage shares, or equal distributions, is a more common estate planning technique because such a plan will allow for the change in asset holdings during the person's lifetime and will avoid or mitigate other legal issues such as ademption (exclusion of gift) and abatement (reduction of gift). While a person may start the estate planning process by considering an allocation of specific assets to each beneficiary, such a plan may not reflect the true desire of the person to provide a percentage value of the estate to each beneficiary. For example, a parent with three parcels of real property and three children may wish to allocate one parcel to each child because each parcel is of approximately the same value. Such a plan does not take account of the possible disposition of one of the properties during the person's lifetime, usually because the current owner of the properties believed none of the properties would be disposed of during his or her lifetime. A better approach, generally, is to provide for gifts of percentage interests in all assets, such as an equal distribution to children, and allow the trustee (or executor) the flexibility to work out allocation of assets among the beneficiaries. If an asset has a particular connection to a beneficiary then a specific allocation of the asset may further the owner's intention, subject to rules that will apply if the asset is disposed of during the owner's lifetime.

Trusts are utilized to control inheritances for a variety of reasons, such as: the beneficiary is too young or financially inexperienced; the beneficiary has creditor problems and an outright distribution would be lost to creditors; or, the beneficiary is disabled and government subsidies might be diminished or lost. In order to effectively control assets for all of these reasons someone other than the beneficiary must be appointed to fill the role as trustee over the assets for that beneficiary. Whereas the assets subject to a trustee's control may be released at a specified age when the concern is a beneficiary's youth or financial inexperience, the trustee probably will maintain control of assets during the beneficiary's lifetime if there are creditor problems (“spendthrift trust”) or the beneficiary suffers from a disability requiring lifetime medical care (“special needs trust”). For the temporary control of a beneficiary's assets due to inexperience or youth, the child may be named as a choice for trustee with the contingency included that the child must attain the age of distribution set forth in the Living Trust before assuming the role of trustee. In other words, it is inconsistent to include an age of distribution in the Living Trust, for example, age 25 or 30, and to name the young or inexperienced beneficiary as trustee unless he or she has attained that very age. There are occasions where the financially inexperienced beneficiary is named as trustee, usually because the trust maker does not have another person the trust maker can trust to control the beneficiary's assets and the trust maker is not interested in naming a financial institution as trustee (perhaps due to the cost or the size of the trust estate for the beneficiary).