Many people who are under the impression that a last will is the right asset transfer vehicle are surprised when they find out that they are mistaken. There are a number different trusts that can be preferable, and the right choice will depend upon the circumstances.
One type of trust that is ideal for a large percentage of the clients we see is the revocable living trust. In this post, we will look at five reasons why you may want to use this legal device as the centerpiece of your estate plan.
Consolidation of Assets
You should take a holistic viewpoint when you are planning your estate. Yes, you have to state your final wishes with regard to the distribution of your assets. However, this is not the long and short of it. It is wise to consider the estate administration process as well.
If all of the property that will comprise your estate is not consolidated in a concise manner, it can be time-consuming and difficult for the estate administrator to identify and inventory the assets. This would be the case if you maintain direct personal possession of your property and arrange for its distribution through the terms of a last will.
Things are entirely different if you utilize a revocable living trust. You can sign over all of your assets to the trust, and the trustee that you name in the trust declaration would have easy access. Most people act as their own Trustee. You can also add a pour over will that would allow the trust to absorb assets that you never conveyed into it while you were living.
Unfortunately, a significant percentage of senior citizens become unable to make sound decisions on their own at some point in time. There are other causes of incapacity, but Alzheimer’s is a leading culprit. It strikes about 13% of all seniors, and the number rises to 40% for individuals who are 85 years of age and older.
When you have a revocable living trust, you can account for possible incapacity. In the trust agreement, you can name a disability trustee who would be empowered to manage the trust if you ever become unable to do so on your own.
If you use a last will as your asset transfer vehicle, the executor that you name in the document would be required to admit the will to probate. This is an expensive estate administration process that is supervised by a court. All of the money that is spent during probate is essentially coming out of the pockets of the rightful inheritors.
Probate is a public proceeding, so anyone who wants to find out how the resources were distributed can access probate records. Plus, it opens a window of opportunity for disgruntled individuals who may want to challenge the validity of the will.
Another major probate drawback is the time consumption. It can take somewhere in the vicinity of a year, even if there are no complications. The people who are named in the will do not receive their bequests until the estate has been closed by the court.
All of these negatives are avoided if you use a revocable living trust instead of a last will. The trustee would be allowed to distribute assets to the beneficiaries in accordance with your wishes outside of probate.
Ongoing Control of Assets
Some people who don’t understand all the facts assume that you surrender control of assets that you convey into any type of trust. In reality, this is not the case. When you establish a revocable living trust, you can act as the trustee and the beneficiary while you are alive. Since it is revocable, you have the ability to dissolve the trust entirely and take back direct personal possession of the assets at any time.
Once you establish the terms of living trust, they are not permanently etched in stone. If you want to change the beneficiary or trustee designations, you can, and you can also convey additional property into the trust after it has been established.
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Our attorneys are holding a number of workshops in the near future. You can learn a lot when you attend one of these sessions, so we urge you to visit our workshop page to see the schedule and obtain registration information.