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Estate Planning with a Living Trust You may already have a Last Will and Testament in your estate plan, but if you want to provide for your beneficiaries without the hassle of probate, you might also need a Living Trust. Living Trust Basics A Living Trust is a legally-binding document that you (the trustor) create to protect and manage your assets until your death. You have control over the trust while you are alive and can appoint a trustee to oversee the distribution of your estate after you die. The primary purpose of a Living Trust is to hold your estate until it can be passed to your beneficiaries. Because the trust is created while you are alive, you have control over what assets are included. Revocable and Irrevocable Trusts There are two types of Living Trusts — revocable and irrevocable. Either will allow your estate to avoid probate and keep the dispersal of your assets more private. A Revocable Living Trust can be changed, or even revoked, by the trustor as long as they are still alive and of sound mind. This type of trust does not go into effect until after the trustor dies. In other words, the assets are still considered part of the trustor's estate until their death. A revocable trust is an ideal choice for anyone who wants flexibility in managing their estate and the option to make changes if necessary. An Irrevocable Living Trust becomes effective as soon as it is created. Assets and property placed in the trust are no longer considered part of the trustor's estate. As its name suggests, an irrevocable trust cannot be changed or revoked. The primary benefits of an irrevocable trust include protection from most lawsuits and exemption from some estate taxes. Testamentary Trust A Testamentary Trust differs from a living trust because it is not created until after the trustor dies. The trustor sets the terms in their Last Will and Testament. Testamentary Trusts are generally created to care for minor children or disabled loved ones. A trustee is appointed to manage the trust, and there is no set expiration date. Setting up Your Living Trust A living trust is created through a legally-binding document that includes details and instructions. The trustees and beneficiaries are also named. You can hire an attorney to handle the paperwork or create the document yourself without the added expense and time of going through a lawyer. Your trust must be signed in the presence of a notary to be legally valid. Funding Your Living Trust There are several ways to fund the living trust: Transfer property titles from your name into the name of the trust Move assets from a financial account or insurance policy by changing the beneficiary of the account to the trust itself Revoking Your Living Trust If you set up a revocable living trust, you have the option to revoke it at any point. You may have to sign paperwork that attests to your mental soundness to make important decisions. To revoke the trust, you will essentially need to undo the actions you took to add assets and property. Transfer the property titles and change the beneficiary information on financial accounts from the trust to another beneficiary. The last step of canceling a living trust is to sign and notarize a Revocation of Living Trust form.
How to Protect Yourself as a Landlord Most people don't become a landlord for fun. You're renting out property to earn a profit. That becomes difficult, if not impossible, if you lose money due to negligence on the part of your tenants. While it won't guarantee that renters won't damage property, protecting yourself by having certain forms reviewed and signed by tenants can help keep everyone on the same page. The following contracts and forms will help protect your investment by mitigating the risks of renting out your property. Rental Application The first step in the landlord-tenant relationship is for the potential renter to fill out a rental application. This form allows for preliminary screening of would-be tenants. By filling out the application and signing it, applicants agree to a background check. With this information, you can see how the prospective tenant treated former rentals and financial transactions in general. It can serve as a window into how the person is likely to act as your tenant. If the background check is less than ideal, this gives you the opportunity to reject the person and wait for a more appropriate tenant. Lease Agreement Let's say the background check looks good. After you approve a tenant, it's time to present the person with a lease agreement. This legally binding document formalizes your relationship with a tenant and serves to protect you and the renter. A lease agreement outlines your expectations of the tenant, including rent price and when it is due each month. The document lists the required security deposit and notes that you will use a portion or all of the security deposit for repairs if the tenant damages the property. The lease agreement should specify the rental duration, most commonly month-to-month or yearly. You can also outline any property rules, such as noise restrictions or if smoking is allowed. Pet Addendum If you have agreed to let a tenant bring a pet onto the property, it's essential to include an addendum to the lease agreement. Such an addition to the lease spells out fees to be charged for having an animal on the premises and additional security deposit costs to cover any possible pet incurred damages. Bed Bug Addendum to Residential Lease It's advisable to provide general information to tenants about bed bugs and bed bug prevention. Additionally, a bed bug addendum discloses the property's bed bug history for the past 12 months and advises tenants of their responsibilities regarding bed bugs. Mold Addendum to Residential Lease A mold addendum to residential lease provides tenants information about mold in residences in general. This document also discloses if there is a known mold presence in the home. Tenants are also told their obligations when it comes to mold in the residence. Asbestos Addendum to Residential Lease Before you lease out a property, you may be required by state or local laws to disclose to potential tenants if you have knowledge of asbestos in the building. Asbestos was commonly used as insulation in home construction before 1981. Left undisturbed, it poses little risk. However, if asbestos becomes airborne, it can cause severe health problems, including cancer. If the structure was built before 1981, or you know of asbestos in the building, you are required by law to disclose this to the tenant. You can do this easily with an asbestos addendum to residential lease form. Residential Rental Checklist To protect your property and your pocketbook, it's always a good idea to document the condition of the property before tenants move in. When the tenant moves out, you can withhold money from the security deposit to cover the repair cost of damage caused by the tenant. Without a residential rental checklist, a tenant could claim that damages they caused were there before they moved in. A formal checklist lets you be sure of the condition of your property. You and the tenant both sign the document to show agreement about the property's condition on move-in day. Landlord Insurance Homeowner's insurance alone is not enough to protect you as a landlord from financial losses. Landlord's insurance offers extra protection for your property. Such policies generally provide property protection that covers damage to the home. This applies to the house itself and any other structures, like a garage. Equipment you leave onsite for maintenance purposes is also covered. It's advisable to require that tenants obtain renter's insurance to cover their property in case of theft, water damage, and other natural disasters. Some tenant policies also provide coverage if a renter is injured. Rent Receipt A rent receipt shows that rent was paid and on what date. Such documentation is helpful for both renter and landlord. A receipt can prevent any misunderstandings or disputes about payment. Key Receipt It's a good idea to keep track of keys and garage door openers. Note how many keys and what type of keys you provide tenants when they move in. This may mean keys to multiple doors, as well as to a mailbox. Stipulate on the receipt that you will charge for lost keys and garage door openers. Residential Lease Termination Agreement A residential lease termination agreement cancels an existing lease before it's originally scheduled to end. When you and the tenant sign a residential lease agreement, you agree to terminate the lease and any obligations attached to the lease. You may choose to charge the tenant a lease termination fee. Notice to Pay Rent or Quit While you hope that tenants pay on time, sometimes they don't. In that case, you may need to order the tenant to pay rent or leave the premises. Giving the renter a notice to pay rent or quit shows how serious you are about collecting rental payments. Being a landlord can be financially rewarding, yet it does pose risks. At 360 Legal Forms, our comprehensive list of landlord and tenant forms can help. See for yourself by signing up for a free trial.