Pay all bills online, where each of you can see the balance all the time. That’s the easiest.Who Should Own the Property—Me? You? Us? Them?
To the question of who should own the property in your
household, no answer is right. But then again, no answer
is wrong. Who ever said this was going to be easy?
Get out your yellow pad again and some more pencils. Write down all the serious property and assets you have: house, bank accounts, cars, mutual funds, stocks, bonds, beach house, other real estate, insurance policies, gold coins, whatever. Who owns each asset? Whose name is on the deed, title, account, or purchase order? Whose money bought it? Is it yours alone or is it held jointly? Is that okay, or should it be owned in some other way? You can keep the property or share it. You can give it away. With a trust, you can give it away and still keep it. (Like the economics of the oldest profession in the world: “You got it, you sell it, you still got it.”)
Federal estate taxes used to have a bearing on who owned what, but now they matter only if you have a superhigh net worth (page 1190). For everyone else, ownership depends on personality and circumstance. Almost every choice has its good and bad points.
Whether you’ve never married (or partnered) or were formerly married, your singleness defines the rules. You are a keeper because you can own everything yourself, no fuss, no muss. All you need is a reliable friend or relative to hold your durable (or springing) power of attorney (page 125) and your health care proxy (page 126). That person could write checks on your bank account, manage your investments, and deal with your doctors if you were incapable (say, in a coma after an auto accident, God forbid).
That’s when you’re young. When you age, you may not be quite so independent and might wonder if sharing ownership could solve some problems. For example, you might think about giving half your house to your son and his family if they will live there with you. Or you might put your niece’s name on your bank account if she helps you do your taxes and pay your bills. If your son is a good egg and your niece is a doll, co-ownership can work.
But what if your son gets a new job and moves? The house might have to be sold to give him the money to buy a new one. What if he gets divorced? His half of your house might have to be divided with his ex-wife. What if your nice niece nicks a bit of your money? A co-owner of a bank account can take every penny unless you specifically require both signatures for withdrawal, which, for daily bills, gets tiresome. You can sue a co-owner for withdrawing more than he or she deposited—but the last thing you want late in life is to get tangled up in lawsuits with your relatives.
You can escape from a co-owned bank account that you’ve come to regret just by taking out your money. But it’s a lot harder to get back your house once you’ve given half of it away. With a house, you might also get into a fight over who should live there or how much to spend on repairs.
Then there’s the fairness issue. A joint owner with the right of survivorship gets the property, regardless of what it says in your will or trust. Say, for example, that your will leaves everything equally to your daughter, Tammis, and son, David. Then you add David to your bank account. He gets every penny of it when you die. You have cut Tammis out. By naming a joint owner, you took your bank account out of your will, and Tammis won’t be able to touch it. The same is true for anything else you put in joint names with a right of survivorship. The other owner or owners walk away with the prize.
There’s a way around the bank account problem: both of you sign a notarized agreement that the joint ownership is for convenience only, not for inheritance (in many states, that’s called a convenience account). But this might not work. If David keeps his mouth shut, the bank might give him the money anyway. Or his creditors might move in on the account. Why run the risk of having to start a lawsuit or stirring up trouble among your heirs? Give David a power of attorney to manage your affairs but hang on to the ownership yourself. Or open an agency account if your bank offers one. It lets you authorize someone else to write checks on your account without making that person a joint owner. For more on powers of attorney, see page 125.
As an alternative to co-ownership, consider a “pay on death” arrangement for your bank savings, investment accounts, and, in some states, real property deeds. With POD accounts, the property is yours for life but transfers to the named successor when you die.
A married couple is a pushme-pullyou, a two-headed animal with two minds of its own. You have to figure out how to pull together.
Poolers put all the money into a common pot. Splitters keep their own separate accounts. Which one you choose is a matter of soul, not finance. Poolers think that sharing, including financial sharing, is what a marriage is all about. Splitters hold to their own independence within the marriage. The previously married often split but sometimes pool. The first-time married often pool but sometimes split. Working couples might do either. It’s so unpredictable that even your best friend might surprise you. Over time, and if the marriage goes well, splitters usually turn into spoolers—splitting some, pooling some, and growing less antsy about who pays for what.
The challenge for poolers is the checking account and the ATM/debit cards. How do you know how much you have in the bank when both of you draw from the same account at different times? To keep your finances organized, you can:
Pay all bills online, where each of you can see the balance all the time. That’s the easiest.
Write no checks away from the checkbook. Use credit cards instead (you can earn points and miles), then pay bills by check or online at the end of the month.
Use checks backed by carbons, if you each want a checkbook. Return all copies to the central checkbook. When you use the ATM, return the receipts to the central checkbook and enter your withdrawal.
Faithfully bring back every debit card receipt, if you use the card to make purchases, and enter the withdrawal.
Walk around with two or three checks. When you use one, enter it into the check register.
Keep a big balance in the checking account to prevent overdrafts. Or sign up for overdraft protection (page 50).
Let just one of you handle the bills. The other hangs on to two or three checks and reports whenever one is used. As in:
She: “Honey, I need more checks.”
He: “How’s that? You still have two.”
She: “No, I’m out.”
He: “What did you write the last two for?”
She: “Didn’t I tell you?”
He: “No.”
She: “Oh.”
It’s the only truly romantic system. Once a month you kiss and make up.
Poolers usually have some separate money, probably in retirement savings accounts. There is also something about an inheritance that often resists the impulse to share. But the house, the savings, and the investments are kept routinely in joint names, even if just one of you makes all the investment decisions.
The challenge for splitters lies in keeping track of who pays for what. As in:
She: “I bought the groceries for two weeks running.”
He: “But I got your laundry and paid the sitter.”
She: “But you already owed me two sitters from last month.”
He: “Those sits were short, so they just count for one.”
You never finally kiss and make up because you never figure it out.
For clarity, you can:
Keep three checking accounts: his, hers, and ours. Each pays into the “ours” account for common household bills or for the children. You can contribute even or uneven amounts, depending on what each of you earns.
Where earnings are unequal, split expenses accordingly—say, 60 percent him, 40 percent her. Apply these percentages to the income taxes too.
Split all expenses right down the middle, even putting down two credit cards when you eat out. (No kidding. I know a couple that does this.)
Make a list of “his” and “her” household expenses and take turns treating each other to dinners out.
Toss receipts for cash payments into a box and settle up when the box overflows. Use the same box for “loans” you make to each other.
Write memos about property bought together, spelling out who owns what percent. Each of you should sign. Your amount of ownership might be based on how much of the price you contributed. Or you could make the ownership 50–50.
When it comes to major financial decisions, splitters should make them together. You are still a single financial unit, regardless of how you handle the money.
I’ve lived under both arrangements—pooling and splitting—and gave up splitting pretty fast. It’s a financial nuisance in a settled relationship and creates small resentments that are a waste of a couple’s time and love.
Then there’s the Old Dispensation: the wife’s paycheck is “hers” while the husband’s is “ours.” I hold with this arrangement only if the husband is well paid and the wife is truly earning peanuts. Otherwise they’re in it together, and both should contribute.
Splitting is Out. Pooling is In. Your basic contract is money-for-services, and everything tends to be jointly owned. If all the property is in just one name and you divorce, the courts are supposed to treat it as mutual marital money, although sometimes the homebody gets short shrift. If the husband keeps bank and investment accounts in his own name, the wife should have her own funds too. Fairness requires that some of the husband’s assets be shifted into her name. (It reminds me of what my grandmother used to call “garter money”: “Pin two dollars to your garter, dear, and if he reaches for it, take a taxi home.”)
Your friends will be enchanted, but don’t be surprised if your children aren’t. It’s usually not the “pater” they worry about but the patrimony. If your new spouse gets your property after your death, he or she is free to cut your children out. Even if you own assets separately, state laws dictate that your surviving spouse should inherit one-half or one-third of them.
To prevent this, you need a prenuptial agreement (see page 146)—truly important for marriages later in life. You agree in advance not to inherit each other’s property but to leave most or all of it to your respective children or other beneficiaries instead. To provide for each other, you might take out life insurance policies or make each other the beneficiary of policies you own already. Or you might agree that you each get the income from the other’s property for life, with the children getting the principal after the death of the surviving spouse. A premarital agreement also settles your rights in case of divorce. One thing it cannot limit: any legal responsibility you have for each other’s long-term care. That will depend on your state’s Medicaid rules. Talk to lawyers about a prenup (you each should have your own). The lawyer will have some good ideas.
You have a high-class problem. If you’re married, you can lower that tax by using bypass, or credit shelter, trusts (page 122), one in each spouse’s will (or in each spouse’s living trust). To make bypass trusts work, however, husband and wife have to own property separately, as community property, or as tenants in common without right of survivorship. Again, see a lawyer. Bypass trusts can’t be funded with property that is jointly owned.
You are probably splitters. Each handles his or her personal expenses, and you work out a system for paying joint bills. A 50–50 split is fair only if your incomes are roughly equal. If one of you earns two-thirds of your combined income, that person should assume two-thirds of the rent and two-thirds of the grocery bills. Otherwise the one with the smaller paycheck is subsidizing the other. If there’s going to be any subsidy at all, it should be from the richer to the poorer, not the other way around. If one of you leaves a job to keep house for the other, consider a written agreement for temporary support if the relationship fails. That gives the at-home partner a financial cushion during the months he or she is searching for a job again.
Longtime partners drift toward pooling some of their money, especially cash used for household expenses. But for property that is complicated to unwind, separate ownership is best.
If you buy a piece of real estate together, do it as tenants in common (page 86). Write an agreement for sharing expenses: how you’ll divide the taxes, insurance, and mortgage payments. What happens if one person quits paying his or her share? If the relationship fails, how will you get your money out? Will you put the house on the market and divide the proceeds according to the percentage each person put up? Will one person buy the other out, and if so, which? How will you determine the price? If one of you dies, will his or her share be willed to the other, or would a written contract be a safer choice? (Remember that minds, and wills, can change.)
A lawyer should draw up these agreements (preferably two lawyers, one for each of you). You’ll never think of all the contingencies yourself. You should also have the contractual right to force the sale of the house if you’re having to shoulder more of the cost than you bargained for.
By all means consider a full cohabitation agreement—the prenup for unmarried couples. It spells out your obligations—or lack of them—to each other. What, exactly, does each of you own? What will each of you contribute to the partnership? If you split, how will you divide the assets and household goods? Is either of you entitled to ongoing support? After a split, a partner who quit working to take care of the home might be able to sue for palimony or for a share of your business if he or she contributed to its success. The only way to prevent such claims is for each of you to waive those options in writing. Look at the sample cohabitation agreement at FindLaw (www.findlaw.com). For a fuller discussion, get Living Together: A Legal Guide for Unmarried Couples, written by three attorneys, from Nolo publishers (www.nolo.com or 800-728-3555).
If your state lets you legalize your union—be it a marriage, civil union, or domestic partnership—you’ll have virtually all the legal rights of a spouse. If you split or divorce, alimony is possible, and the property normally has to be divided roughly in half—again, unless your cohabitation agreement says otherwise.
Parents—married or not—are obligated to support their minor children, no matter what their written agreement says.
The owners (there can be more than two) hold the property together. If one dies, his or her share passes automatically to the other owner (or other owners), usually in equal parts. This form of ownership is for married couples, for any two people who live together and need a convenient household account, and for truly committed unmarried couples. It protects gay couples whose relatives might attack a will. Your contribution to the joint account can be attached by your creditors, but your partner’s share can’t.
To put something in joint ownership, you list it as such on the deed, title, or other ownership document, specifying “with right of survivorship.” That’s important. Otherwise it might be argued that you held the property only as tenants in common (see below).
Joint ownership isn’t an inescapable trap. You can generally get out of it—although not always easily—even if the other owner objects. The ways of doing this vary, depending on your state’s laws. When a jointly owned property is sold, the proceeds are normally divided equally. If you all agree, however, you can make an unequal division. (Gift taxes might be due if one owner gives the others part or all of his share.)
This is a good way to own a beach house or snowblower with a friend. Married couples use this method when they want to leave their share of a co-owned property in trust. So do unmarried couples who can imagine an end to their relationship.
Each tenant in common has a share in the property, although not necessarily an equal share. You can sell or give away your share at any time. In the case of a house owned in common, for example, your partner could sell his piece to his brother, and suddenly you would have a new roommate. If the owners fall out, one might buy the other’s share. Or one could file a partition lawsuit that might force the property to be sold.
You can pass your share of a co-owned property to anyone at death; it doesn’t automatically go to the other owners. If you die without a will, your share of the property will be distributed to your relatives, according to state law. So write a will.
This arrangement, for married couples only, must be established in writing (a properly worded deed will do it) and is recognized by twenty states. It’s similar to property owned jointly with the right of survivorship but gives each of the owners more protection. Neither of you can divide the property without the other’s consent. In many cases, it’s protected against one spouse’s creditors (assuming that only one spouse signed the debt). If you divorce, it’s automatically split 50–50.
Nine states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin) have community property rules for married couples. They declare that property acquired by either spouse, with money earned during the marriage, is owned by both, regardless of whose name is on it. This rule affects anyone who ever lived in a community property state. Even if you move away, your community property keeps its character. It is always 50 percent owned by each spouse (although, as a practical matter, this ownership right can be lost if you don’t document it when you move to a non–community property state). The portion of a private pension earned during a marriage is usually community property, but Social Security isn’t.
During life it is hard to dispose of your half of the community property without the other’s consent. At death, things change. If your state lets you hold your half of the property with right of survivorship, it goes to your spouse. If not, you can generally leave it to whomever you want; it doesn’t have to go to your spouse. Unlike jointly owned property, community property goes through probate (that is, unless you hold it in trust or use some other probate-avoiding mechanism allowed by your state). For more on probate, see page 129.
All the states have slightly different rules about what is not community property. They generally exempt inheritances, gifts, and property acquired before marriage. Most (but not all) states exempt property acquired before moving to the state. However, in order for separate property to stay solely yours, it has to be kept apart from the property you own together. If you inherit money and want to maintain sole ownership, put it into a bank account or other investment in your own name. If you mix separate property with community property, it may join the community whether you mean it to or not.
You can get out of community property if you’d rather hold your assets in some other way. Each state runs its own escape routes. For example, you might make a gift of your community property interest to your spouse. You might sign an agreement specifying what is community property and what isn’t. In most of the states (but not all), you can annul the community property rule with a premarital or postmarital agreement. Non–community property can be owned separately or jointly, as you prefer.
1. It makes marriage a partnership; share and share alike.
2. When one of you dies, the other automatically gets the goods. No doubts, no delays, no tears, no probate.
3. The other owner can’t wheel and deal the money away. As a practical matter, most joint property cannot be sold or borrowed against unless both of you sign.
This applies especially to real estate and securities registered in your personal names. Securities held in the name of a brokerage house (“street name”—see page 801) are another story. It normally takes only one of you to buy and sell, even if the account is jointly owned. Similarly, mutual funds usually allow either of you to make telephone switches. But be it a mutual fund or a brokerage account, neither of you should be able to take the money and run. A check for the proceeds of any sale will be issued in the joint names. (This doesn’t prevent some spouses from forging the other’s signature!)
Your most vulnerable property is a jointly owned bank account, which your spouse can easily clean out.
4. In divorce, a joint owner is a more formidable force. Under state laws, the marital assets are supposed to be divided fairly, without regard to who holds title. But possession might still be seven-tenths of the law. If you hold the property or at least have your name on it, your bargaining position is stronger than if you don’t.
5. Out-of-state property passes to the other owner, without probate in that state. This saves your survivor some time and money.
6. Say there’s a debt that you’re not responsible for, such as a judgment levied against your spouse. If he or she dies, those creditors usually can’t collect a dime from joint property. During your spouse’s lifetime, however, joint property is vulnerable—to what extent depends on the laws of your state. You get the most protection in a tenancy by the entirety (page 87).
1. If one of you splits, he or she can clean out the bank accounts and safe-deposit box. You can file a lawsuit to get back what’s yours, but the effort might cost more than it’s worth.
2. Some investments can’t be sold if one of you is too sick or senile to sign the papers or too sore to cooperate. A durable power of attorney solves the sick-or-senile problem. The second is all yours.
3. You can’t set up a bypass trust to reduce your estate taxes if your property is jointly owned with a right of survivorship. So if you’re wealthy, this form of ownership costs you money. However, joint property can be disclaimed into a bypass trust. You disclaim an inheritance when you refuse to accept it. If you’re disclaiming for tax purposes, federal law gives you nine months to decide. The inheritance then passes to the next person or people in line, perhaps in trust.
4. Your kids might lose money if you marry more than once. Say you put all your property into joint names with a new spouse—and die. That spouse gets everything and can cut out the children from your previous marriage. Don’t assume that your new spouse will do the right thing by your kids. The spouse may have his or her own children, who might want the money kept in their part of the family and will pressure an elderly parent to comply. Separate property plus a prenup make things simpler for everyone.
5. Joint property can be tied up for a long time in divorce because it often can’t be sold until both spouses agree to sign. Separate property can be sold anytime you want unless a judge ties it up during a contested divorce.
6. In community property states, you’ll save taxes by choosing community ownership rather than joint ownership. When an owner dies, any taxable capital gains on the property are erased. This applies to only one-half of joint property but all of community property.
1. It passes automatically to the other without a will and without probate. This is a strong case only for committed couples—for example, gay and lesbian couples whose families disapprove of the relationship and might challenge a will. A carefully drawn will usually can’t be broken, however, except by a surviving spouse who wasn’t left the share of the property required by state law.
2. It’s a sign of good faith.
3. It’s convenient. A mother and daughter living together might want a joint account for household bills.
1. If you want to take your property out of joint names and the other person refuses, you may have the devil’s own time getting it back. Only bank accounts are simple to reclaim. You just take the money out (unless …
2. … the other person got there first. Either owner can empty a joint bank account. You’d have to sue to get your money back.
3. You might need both signatures to sell an investment or to cash a check for the proceeds of a sale. What if your ex-mate gets sore or leaves town?
4. Say you put your investments in joint names with your son, who manages them for you. His business goes broke. His half of your property could be attached to pay his debts. (He can manage your money just as well with a power of attorney or through a trust.)
5. Assume the same story, except that your son gets divorced. Part of your property might go to his ex-wife.
6. Same story, only you have two sons. When you die, Son One inherits your investments, and Son Two gets nothing. Joint property usually goes to the surviving joint owner, cutting other beneficiaries out. (A few states might allow you to designate that your joint account will go half to Son One and half to Son Two or your other beneficiaries.)
7. The relationship might end but not joint ownership. For example, say that you and a partner own a house together. Even if the partner buys you out, you’re still on the mortgage and are fully responsible for the debt. Only the lender can release you, and the lender may refuse to do so. If your partner (ex-partner) quits paying the mortgage without your knowledge, the default will show up on your credit report. Ditto any liens that your ex’s creditors put on the house. If the bank comes after you for the mortgage payments, you’ll be supporting your ex-partner’s real estate investment and getting nothing in return—unless a written agreement allows you to force the sale of the house to recover the money you put up.
8. If you’re rich enough to owe federal gift and estate taxes (page 120), you can trigger a tax liability when: (1) Stocks or real estate go into joint names, and the owner doesn’t pay for his or her half share. (2) The noncontributing owner takes money out of a joint bank account or U.S. Savings Bonds. (3) One of you dies. All joint property is taxed in the estate of the first owner to die except for anything that the survivor can prove he or she paid for. These rules, incidentally, apply only to joint owners who aren’t married. Most married couples* can give, or leave, each other property without paying federal gift or estate taxes. At this writing, you can also give away $13,000 annually, tax free—$26,000 for gifts made with a spouse—to each of as many people as you want. (This exemption may change when the estate tax rules do—page 120.)
Own your cars separately. If you cause an accident and are hit with a judgment that exceeds your insurance, your other property can be attached—and so can the property of the car’s joint owners. If you own the car alone, no one else will be affected.
He or she may have rights to property and support provided for in law.
Federal tax law doesn’t recognize these unions, but states that authorize them do. In these states, you have the same property, inheritance, and state estate tax rights as traditional married couples, so check all the ways of owning property together, listed above.
That’s a close call. Congress wiped out most of the tax break that used to encourage parents to shift investments into their children’s names. Today, a small amount of the child’s unearned income—interest, dividends, and capital gains—passes tax free, and an equal amount is taxed at the child’s own rate. The rest is generally taxed in the parents’ bracket for dependent children under 19 years of age or dependent, full-time college students under 24. (For the latest unearned-income amounts, see Publication 17, Your Federal Income Tax, at www.irs.gov.)
The tax break still works for children who save the money until they grow up. Any interest or dividends they earn may be low enough to fall into their own tax bracket. If they don’t go to college and start supporting themselves, they can sell at age 19 or older and pay the capital gains tax in their own bracket, which may or may not be lower than their parents’ bracket.
It’s another matter if the child goes to college and will need this money for tuition. Investment proceeds are taxed in the parents’ bracket. Families saving for college are far better off with 529 plans (page 667), where investment income and capital gains can pass tax free.
If you do want to make a money gift to children, it has to pass through the following four wickets:
1. You won’t need the property back. This isn’t Ping-Pong. Whatever you give your child is his or hers to keep.
2. You have the sort of kid who won’t take the money and blow it. Gifts are generally given under the Uniform Transfers (or Gifts) to Minors Act. At age 18 or 21, depending on state law, the property will belong to the child unless it’s protected by a trust or some alternative, such as a family limited partnership (ask a lawyer about that one).
3. The small tax savings are worth the loss of flexibility.
4. You think that your child won’t be eligible for much college aid. Eligible students get larger grants or loans if the savings are in the parents’ name rather than the child’s name (see page 686).
There are better and worse ways of giving money and property to a child under 18. Here are your choices:
1. Outright ownership. You hand the money to the child with a ribbon around it. That’s okay for a $100 birthday present or a $50 savings bond at a bat mitzvah. But don’t do this with larger sums. Sometimes access to the money is too easy: the child can cash out bank accounts or savings bonds whenever he or she wants (although you could hide the bonds!). With stocks and real estate, on the other hand, access is too strict: it’s tough, sometimes impossible, for your son or daughter to sell the property while underage.
Some people think they have given money to a child by opening a bank account in trust for him or her. Not so. You still own the money and pay taxes on the interest. It doesn’t pass to the child until you die.
2. Joint property. Forget it. Putting property in joint names with a child is even worse than giving it outright. You can’t sell the whole property without the child’s consent. If the child is underage, he or she usually can’t give consent without the agreement of a court-appointed guardian. You still owe taxes on at least part of the income. If you die rich enough to owe estate taxes, the entire property can be taxed in your estate (depending on your state). The only joint property that you can liquidate easily is a joint bank account. But that doesn’t even count as a gift, or save you taxes, unless the child withdraws the money.
3. College 529 plans. If you intend that the money be used for higher education, 529 plans (page 667) are the ticket. The money accumulates tax deferred and can be withdrawn for college expenses tax free.
4. Uniform Transfers to Minors Act. In the states that have passed it, UTMA makes sense for substantial gifts intended for purposes other than higher education. Cash, stocks, mutual funds, bonds, real estate, and perhaps even insurance policies can be given to an adult acting as custodian for the child.
The custodian—typically, your spouse, the child’s parent, or some other close relative—manages the money and can spend it for the child’s benefit. Most states require the remaining money to be distributed to the child at age 18 or 21, although some have extended the time period.
States without UTMA have the older but similar Uniform Gifts to Minors Act (UGMA). With UGMA, however, you can’t transfer real estate or other complex types of property.
Gifts under UTMA or UGMA pass with no muss and no fuss. Your bank, mutual fund, stockbroker, or insurance agent can give you the papers and tell you where to sign. In fact, it’s almost too easy. Without legal advice, you might make a gift that you’ll regret.
Don’t name yourself custodian. If you do, and you die before the child becomes a legal adult, the money will be included in your taxable estate just as if you hadn’t given it away.
5. Trusts in the child’s name. To give a child a large sum of money, see a lawyer experienced in trusts. A true gift has to be an irrevocable trust—meaning that you can’t change the beneficiary, cut the child out, or take the money back. These trusts can do almost anything you want: accumulate the income or pay it out; pay out income but not principal; or hand over the money at whatever age you think your child will be grown up. (No, don’t wait until 50; if the child doesn’t grow up earlier, he or she never will.)
Don’t use trust income for the child’s support, and be sure that the trust so specifies. Support is your legal obligation. If the trust picks up your obligation—by paying for your child’s food and clothing—that income can be taxed back to you.
So here’s the big question for well-to-do parents: Can trust income be used to pay for private school or college? In divorce courts, education is increasingly considered a legal obligation for parents with money. But so far, there has been no tax attack on the many trusts that pay your child’s school and college bills. Parents should not sign a contract to pay tuition if a trust is involved. However, it’s okay for them to sign as trustee.
Maybe. A lot of people set up living trusts, principally to avoid probate. They shift the property out of their own names and into the trust, naming themselves trustee. But probate isn’t the black hole it used to be. Most states have simplified their laws, making the process pretty straightforward. You’ll find a discussion of probate and living trusts in chapter 6. That will help you decide whether having a trust is worth the cost and paperwork.
My view? These trusts are suitable only for a small group of people. If you’re not among them, don’t waste your money.