A living trust is a relatively simple and straightforward, versatile, highly effective estate planning device that can be the right choice for a wide range of people. Single individuals can utilize a revocable living trust as an estate planning tool, and married couples can also jointly execute a living trust.
The Anatomy of a Living Trust
With a living trust, the trust administrator is called the trustee. The individual that can receive monetary distributions from the trust is the beneficiary. It should be noted that there can be multiple beneficiaries, and multiple trustees.
Some people think that after they convey assets into a trust, they have to step out of the picture, and they no longer have any role. The assets are no longer in their control.
For this reason, there are laypeople that decide that they are not interested in creating a trust, because they are concerned about surrendering all access to the assets. Yes, they may be in a position to look at the trust as a legacy container of sorts when they establish it, but what if they need the money for some reason later on?
This is a justifiable concern, but it is not a factor with a living trust. If you establish a living trust, you do not surrender incidents of ownership, because it is revocable. If you ever choose to dissolve the trust and take back direct personal possession of the assets that you conveyed into the trust, there is nothing stopping you.
Getting back to the trustee and the beneficiary, if you establish a revocable living trust, you can act as the trustee and the beneficiary while you are alive and well. When a joint living trust is established by a married couple, both parties would share beneficiary and trustee responsibilities.
Either person could remove assets from the trust, sign property over to the trust, or revoke the trust entirely.
There are various different ways to construct the trust with regard to what happens after the death of one of the trust creators. This being stated, to keep it simple here, we will explain the most common course of action. In most cases, after the death of one of the grantors, the surviving spouse would act as the sole trustee and beneficiary of the trust.
The survivor would have complete control of all of the jointly owned assets in the trust unless there was a different beneficiary named in the trust declaration. Under these circumstances, the beneficiary would receive the share of the jointly held property that was owned by the decedent.
If the person that passed away made their spouse the beneficiary of separate property, the remaining partner would assume control over that property. However, a different beneficiary could be named in the trust declaration to inherit all or some of the separate property.
For example, let’s say that a husband has one child from a previous marriage. He could potentially make that child the beneficiary of some of the separate property that is contained within the joint living trust.
Going forward, the surviving spouse could keep the trust intact as an estate planning tool and name a successor trustee and successor beneficiaries. This is one option, but the right of revocation would still be in place.
Download Our Free Estate Planning Worksheet!
We have provided a very basic explanation of one small sliver of the entire estate planning pie in this relatively brief blog post. If you would like to gain a more comprehensive understanding of the process, we have a fantastic resource you can access right here this website.
Our estate planning attorneys have developed a very useful estate planning worksheet, and you can really learn a lot if you take the time to go through it. This worksheet is being offered free of charge at the present time, and you can visit this page to get your copy.
Michael Robinson, Estate Planning Attorney
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