Which legal document is essential for creating a living trust?

A trust declaration is essential for creating a living trust because it serves as the foundational legal document that outlines the terms and conditions of the trust. This document specifies the assets being transferred into the trust, the roles of the trustor (the person creating the trust), the trustee (the person managing the trust), and the beneficiaries who will benefit from the trust.

This formal declaration establishes the intent to create a trust and must be executed in compliance with state laws to be effective. It clearly delineates the powers and responsibilities of the trustee, ensuring that the trust is managed according to the trustor’s wishes.

Other options do not fulfill the same purpose. An affidavit may be used in related legal matters but does not create a trust. A memorandum of understanding typically outlines an agreement between parties and lacks the legal authority to designate trust assets. Lastly, a last will and testament is used for distributing assets upon death and does not establish a living trust, which is intended to manage assets during a person's lifetime.