This joint revocable living trust is made between _____________ of _____________, _____________ and _____________ of _____________, _____________ (each a "Grantor") who create this instrument in mutual consideration of the following covenants and undertakings:
Certification of Grantors
By signing below, I certify that I have read this Living Trust and that it correctly states the terms and conditions under which the Trust Property is to be held, managed, and disposed of by Trustee, and I approve the Living Trust.
Signed: _____________________________ Dated: ______________
_____________, Grantor
Signed: _____________________________ Dated: ______________
_____________, Grantor
NOTARY ACKNOWLEDGMENT
State of _____________
SS.
County of _____________
On _______________ (date), before me, personally appeared _____________ and _____________, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to within the attached _____________ and _____________ Joint Revocable Living Trust acknowledging to me that he/she/they executed the same in his/her/their authorized capacity(ies) and that by affixing his/her/their signature(s) on the instrument so executed the instrument.
I certify under PENALTY OF PERJURY that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Print: ________________________ My Commission Expires: ________________________
Sign: ________________________ [Affix seal]
NOTARY PUBLIC
SCHEDULE A
JOINTLY-HELD TRUST PROPERTY
This SCHEDULE A - JOINTLY-HELD TRUST PROPERTY is incorporated into The _____________ and _____________ Joint Revocable Living Trust. At the time of execution of this Living Trust, "Jointly-Held Trust Property" includes the following assets, and such property may hereafter be added to or subtracted from according to the Grantors' wishes:
Grantor Initials: ______ Grantor Initials: ______
SCHEDULE B
_____________________'S SEPARATELY-HELD TRUST PROPERTY
This SCHEDULE B - _____________'S SEPARATELY-HELD TRUST PROPERTY is incorporated into The _____________ and _____________ Joint Revocable Living Trust. At the time of execution of this Living Trust, "_____________'s Separately-Held Trust Property" includes the following assets, and such property may hereafter be added to or subtracted from according to the Grantors' wishes:
Grantor Initials: ______ Grantor Initials: ______
SCHEDULE C
_____________________'S SEPARATELY-HELD TRUST PROPERTY
This SCHEDULE C - _____________'S SEPARATELY-HELD TRUST PROPERTY is incorporated into The _____________ and _____________ Joint Revocable Living Trust. At the time of execution of this Living Trust, "_____________'s Separately-Held Trust Property" includes the following assets, and such property may hereafter be added to or subtracted from according to the Grantors' wishes:
Grantor Initials: ______ Grantor Initials: ______
Instructions for Your Joint Revocable Living Trust
Next Steps
Review Your Living Trust
If you find any issues, you can easily make changes on LegalNature's website or by downloading and editing the document in Microsoft Word. Then simply print and proceed to the next step.
Sign and Notarize
In order for your living trust to be executed properly, you must sign it in front of a notary public and then have it officially notarized.
Complete Related Documents
Included with your living trust is a Notice of Assignment and a Certificate of Trust. The Notice of Assignment is used to evidence the transfer of any property you listed that is untitled—as in, without official title paperwork—into the trust. In some states, like New York, this is required; whereas in other states this is simply a recommended formality. If making a joint living trust, both Grantors will need to complete a form. The Certificate of Trust is used to show a financial institution or other organization that you have created a trust while keeping the rest of the information in your trust document private. It will need to be completed by hand and then notarized. It is best to make multiple copies.
Transfer Property to Your Trust
Transferring property into your trust is crucial. Without doing this, your trust will not be properly funded and your property will remain outside of the trust. All untitled property will be handled by the Notice of Assignment. Any property that has a title should be transferred to the Trustee to hold in the name of the trust. This includes stocks, bonds, real estate, and bank accounts. A common format for the transfer language is "Joe Smith, as trustee of Joe Smith Revocable Living Trust u/a/d [DATE]." You may use the Certificate of Trust as evidence of the trust's existence.
Distribute Copies and Add Useful Information
Give a copy of your completed living trust document to your successor Trustee; this will make it easier for the Trustee to take control when the time comes. It may also be good to compile all relevant information about trust property and beneficiaries for your trust bundle.
Periodically Review and Update
At this point the hard work is done! It is important to review your living trust from time to time to ensure everything still reflects your circumstances. Do not forget that you can continually add and remove property from your trust.
Funding Your Revocable Living Trust
Depending on the type of asset, the process for transferring can vary. Below is a short guide to varying types of assets. Please be aware that the process can vary from state to state and by the institution that holds the asset. Additional assets can also be added to your revocable living trust at a later date. Listed below are the most common assets transferred into a revocable living trust.
Real Estate
In most cases, the transfer of real estate must be evidenced in writing. This normally is done through a transfer deed—either a quit claim deed or general warranty deed. The deed will witness the transfer of the real estate from the Grantor's name into the trust name.
If the property is still subject to a mortgage or any other debt, this will not normally affect the transfer of the property to a trust. You should check with your lender to ensure that there are not any restrictions and to find out what the procedure for updating records is.
In the event the real estate is covered by any type of insurance, such as title or property insurance, the Grantor should check his or her coverage with the insurance company. Not all policies allow for or cover property under a voluntary transfer of title.
Stocks and Bonds
If the stocks and bonds are held in a brokerage account, normally only the name on the account needs to be changed. However, if the Grantor holds the security certificates, these will need to be transferred into the name of the revocable living trust.
Bank, Savings, and Other Accounts
In most cases, simply the name on the account needs to be changed. You should contact the relevant institution to obtain the relevant procedure.
Personal Property
Personal property, also known as tangible property, is usually property that does not have any title attached to it, such as jewelry or antiques. This property is transferred to the trust simply by listing it in the revocable living trust as "Trust Property." The transfer of this property is further evidenced through the completion of the Notice of Assignment.
Property Character
For the purposes of a joint revocable living trust, property can have one of two characteristics: it can either be separately held or jointly held. Separately-held property is legally owned by only one of the partners. This means that one partner has title to the property, while the other party has absolutely no claim to it. An example of this would be a car that was purchased before marriage where the title is in the purchasing partner's name.
Jointly-held property is property in which both partners have some form of ownership. In the simplest form this would be property that both partners legally own. An example of this is a house purchased after marriage where both partners are on the title deed. There are three basic forms of joint ownership: tenancy in common, joint tenancy with right of survivorship, and tenancy by the entirety.
Community Property
The confusion between jointly- and separately-held property is further confounded when dealing with what is known as community property. There are nine states that automatically apply community property rules. Community property is essentially marital property that is considered equally owned, despite which partner holds title. The community property rules apply to all property and income that either partner acquires during the marriage, with the exception of specific gifts given to one spouse or inheritances.
Even though there are only nine states that automatically enforce community property rules, most non-community property states (also known as common law states) do have provisions for when community property is brought from a community property state to a non-community property state. Real estate always applies the rules of the state it is located in, regardless of where the owners live.
Distribution of Trust Property Upon the First Death of a Grantor
When making a joint revocable living trust, one of the biggest decisions to make is what happens to trust property when the first of the Grantors passes away. LegalNature's joint revocable living trust provides options to either vest all trust property to the surviving Grantor or to split the joint revocable living trust into two separate subtrusts. Both options have their pros and cons, and deciding between each option will be determined by the priorities of the Grantors. If all trust property is vested to the surviving Grantor, the trust will remain revocable and changeable in its entirety. In other words, the trust will continue on in the same manner as when both Grantors were living, allowing the surviving Grantor to amend the trust and add or remove trust property as he or she chooses.
Some of the downfalls of the first option are as follows: it cannot be guaranteed that the deceased Grantor's wishes are carried out, the Grantors may not get the full advantage of tax relief, and it will not maximize protection from creditors.
If the second option is chosen, the trust will be split into separate subtrusts. The deceased Grantor's subtrust will become irrevocable, while the surviving Grantor's subtrust will remain revocable until death. These subtrusts will consist of each Grantor's respective separately-held property and shares of jointly-held property. This option allows each Grantor to ensure that their wishes are fulfilled. This may be the best option if a Grantor has familial connections, such as children, that are not shared with the other Grantor.
Capital Gains and Step-Up Basis
When funding the joint revocable living trust, it is worth taking capital gains tax and the discount provided by step-up basis into consideration. Capital gains tax is calculated on the difference between the value of property at the time of acquisition and the market value when the property is disposed of. The IRS provisions allow for an increase, or stepping-up, of the value of the property at acquisition, or basis, at the time of death of one of the Grantors. How the step-up rule applies varies depending on how the property was held prior to death. For separately-held property, a full step-up value is applied, meaning when the property is transferred, the current market value of the property will be considered the basis for capital gains purposes. For jointly-held property there are two outcomes:
For non-community jointly-held property the step-up basis is only applied to the deceased's shares of the jointly-held property. For example, imagine a house was jointly purchased for $100,000 and at the time of death it was worth $200,000. While both Grantors are living, capital gains tax would be applied to $100,000—the total rise in value. After transfer through the trust, $50,000, being the deceased's share, will be disregarded. This means the house will have a basis of $150,000, and capital gains tax would be payable on the difference between $150,000 and the amount the house is sold for.
In community property states the step-up is more generous. The basis is stepped-up to the current value at the time of the deceased's passing. Using the above example, the capital gains tax basis would become the full $200,000.
Subtrusts for Your Spouse and Children
Our joint revocable living trust also gives you the nifty option of creating a subtrust for your children. This subtrust will kick in upon the death of the Grantors and will provide for your children's health, support, and education during their lives. This helps ensure that the money you give them will last and continue to accrue interest and dividends while the Trustee has it invested. The Trustee will still have the option to give all of the money to them should there be an emergency or other important reason.
Avoiding Probate and Estate Taxes
Note that any testamentary trust (a trust created in your will that goes into effect at death) will be probated before the trust is created. Also, if your estate will be larger than the current federal estate exemption amount—$5,450,000 (as of 2016, set to rise to $5,490,000 in 2017)—then your estate will be subject to federal estate tax. In which case, it is also a good idea to try to use trusts to ensure your money goes where you want it to go after you are gone.
A joint revocable living trust can aid Grantors in avoiding estate tax by choosing to divide the trust at the time one of the Grantors passes away. By dividing the trust into two separate trusts, each trust receives the maximum exemption. The newly-created trusts can still be used to benefit the Surviving Grantor.
Posting Bond
A bond may be posted as insurance in case your Trustee acts dishonestly or imprudently with your trust property. The bond payment will come out of your trust property to cover any losses. However, this is usually a small price to pay to ensure the trust property is safe. Requiring a bond is not an insult to the Trustee. Think of it more as an insurance policy that will protect you from mishap. A bond is therefore recommended if the trust can afford it.
Supplementary Legal Documents
Certificate of Trust
As previously mentioned, the trust authorizes Trustees to create and sign a Certificate of Trust, also known as an Abstract of Trust. The purpose of a Certificate of Trust is to prove the existence of a trust without disclosing its private details. Most states have enacted laws that govern the use of Certificates of Trust, requiring third-party organizations to accept a certificate as long as it complies with state requirements.
Although there may be some slight variations depending upon state law, a Certificate of Trust normally comprises the following sections:
It is best practice that all Trustees sign the Certificate of Trust and that the document is notarized.
Notice of Assignment
A Notice of Assignment is used to officially evidence the transfer of property from a Grantor to a trust. Each Grantor should complete their own notice. Some property, such as cars, houses, or shares, have titles that can be changed to show new ownership; however, other items, such as art, jewelry, or antiques, do not, even though their value can be high. The use of a Notice of Assignment officially witnesses the transfer of untitled property to avoid doubt and lower the possibility of any future conflict.
While a Notice of Assignment is not required in every state, it is still advisable that you complete the notice. The document should list all property being added to the trust and should be signed and notarized. In the event that any untitled property is added to the trust at a later date, a new Notice of Assignment should be made for that property.
Certificate of Trust
Pursuant to Alabama Code Section 19-38-1013
The undersigned hereby declare(s) the following to be true and correct:
The undersigned trustee(s) hereby declare(s) that the trust has not been revoked, modified, or amended in any manner which would cause the representations contained herein to be incorrect.
Signed: _____________________________ Dated: ______________
Trustee
Signed: _____________________________ Dated: ______________
Trustee
NOTARY ACKNOWLEDGMENT
State of _____________
SS.
County of _____________
On _____________________ (date), before me, personally appeared _________________________________, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to within the Certification of Trust executed on __________________, acknowledging to me that he/she/they executed the same in his/her/their authorized capacity(ies) and that by affixing his/her/their signature(s) on the instrument so executed the instrument.
I certify under PENALTY OF PERJURY that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Print: ________________________ My Commission Expires: ________________________
Sign: ________________________ [Affix seal]
NOTARY PUBLIC
Notice of Assignment of Property to Living Trust
I, _____________, the undersigned, and a Grantor of , hereby provide Notice and assign all of my rights, interests, and titles of all property listed on the attached Schedule of Assets of Living Trust in favor of the aforementioned trust.
Signed: _____________________________ Dated: ______________
_____________, Grantor
NOTARY ACKNOWLEDGMENT
State of _____________
SS.
County of _____________
On _____________________ (date), before me, personally appeared _________________________________, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to within the Notice of Assignment of Property to Living Trust executed on __________________ (signing date), acknowledging to me that he/she/they executed the same in his/her/their authorized capacity(ies) and that by affixing his/her/their signature(s) on the instrument so executed the instrument.
I certify under PENALTY OF PERJURY that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Print: ________________________ My Commission Expires: ________________________
Sign: ________________________ [Affix seal]
NOTARY PUBLIC
Schedule of Assets of Living Trust
At the time of execution of this Living Trust, _____________'s "Trust Property" includes, without limitation, the following assets, and such Trust Property may hereafter be added to or subtracted from according to the Grantors' wishes:
_____________'s Initials: ______
Notice of Assignment of Property to Living Trust
I, _____________, the undersigned, and a Grantor of , hereby provide Notice and assign all of my rights, interests, and titles of all property listed on the attached Schedule of Assets of Living Trust in favor of the aforementioned trust.
Signed: _____________________________ Dated: ______________
_____________, Grantor
NOTARY ACKNOWLEDGMENT
State of _____________
SS.
County of _____________
On _____________________ (date), before me, personally appeared _________________________________, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to within the attached Notice of Assignment of Property to Living Trust executed on __________________, acknowledging to me that he/she/they executed the same in his/her/their authorized capacity(ies) and that by affixing his/her/their signature(s) on the instrument so executed the instrument.
I certify under PENALTY OF PERJURY that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Print: ________________________ My Commission Expires: ________________________
Sign: ________________________ [Affix seal]
NOTARY PUBLIC
Schedule of Assets of Living Trust
At the time of execution of this Living Trust, _____________'s "Trust Property" includes, without limitation, the following assets, and such Trust Property may hereafter be added to or subtracted from according to the Grantors' wishes:
_____________'s Initials: ______
A joint revocable living trust is used by spouses to secure their assets during their lifetimes and then efficiently transfer those assets upon death. One key advantage is that the assets in the trust will avoid probate court. This saves you from paying court fees and ensures that those assets will be distributed much more quickly.
The spouses retain complete control over the trust assets during their lives. After the trust is created it can be revoked or amended at any time, allowing the spouses to remove the assets from the trust should the need arise.
LegalNature's intuitive form builder guides you through each step of the process, making it easy to understand and giving you a powerful estate planning document you can rely on.
A joint revocable living trust is used by spouses to secure their assets during their lifetimes and then efficiently transfer those assets upon death. One key advantage is that the assets in the trust will avoid probate court. This saves you from paying court fees and ensures that those assets will be distributed much more quickly.
The spouses retain complete control over the trust assets during their lives. After the trust is created it can be revoked or amended at any time, allowing the spouses to remove the assets from the trust should the need arise.
LegalNature's intuitive form builder guides you through each step of the process, making it easy to understand and giving you a powerful estate planning document you can rely on.
A joint revocable living trust is used by spouses to secure their assets during their lifetimes and then efficiently transfer those assets upon death. One key advantage is that the assets in the trust will avoid probate court. This saves you from paying court fees and ensures that those assets will be distributed much more quickly.
The spouses retain complete control over the trust assets during their lives. After the trust is created it can be revoked or amended at any time, allowing the spouses to remove the assets from the trust should the need arise.
LegalNature's intuitive form builder guides you through each step of the process, making it easy to understand and giving you a powerful estate planning document you can rely on.
Show LessThis guide provides an explanation of the key terms and considerations when creating a joint revocable living trust. Here we elaborate on the step-by-step guidance we provide you when answering our document questionnaire.
Review the basic steps you will need to follow before and after completing a joint revocable living trust. This includes information on transferring assets into your trust, when to make updates, and which related documents you should complete.