The revocable living trust is a very useful estate planning tool, and these trusts are quite popular among those who understand the facts.
When you maintain direct personal possession of your property, the property becomes probate property initially. Probate is a legal process that takes place under the supervision of the Surrogate’s Court in the state of New York. This process is quite time-consuming, and the heirs to the estate do not receive their inheritances while the estate is being probated.
This process would come into play if you used a last will to direct future asset transfers.
If you were to create a revocable living trust as a vehicle of asset transfer, the beneficiaries could receive their inheritances outside of probate.
Let’s look at the anatomy of these trusts with a focus on the role of the trustee.
Living Trust Trustee
The trustee is the individual or entity who handles the estate administration tasks.
One of the benefits that you derive when you use a revocable living trust is the ongoing control. If you create a revocable living trust, you are the grantor of the trust. Though you do not have to go this route, the grantor will typically act as the trustee at first. As the trustee, you can direct the actions of the trust while you are alive and well.
The grantor can also act as the initial beneficiary of the trust.
The eventual goal is to facilitate efficient asset transfers to your loved ones after you die. To achieve this objective, you name a trustee to succeed you after you pass away. You also name successor beneficiaries who will receive monetary distributions from the trust after your passing.
Any adult who is mentally competent can technically act as the trustee. You are certainly free to name someone that you know, but there are some drawbacks.
Though you may trust various people in your life, do you know someone who has experience administering a living trust? This is one drawback. There could also be conflicts of interest between the trustee and the beneficiaries. Thirdly, longevity can be a factor. How long will the trustee live after your passing?
Given the above drawbacks, many people will use a professional fiduciary entity like a trust company or the trust department of a bank. These corporate trustees understand the process, and there is organizational oversight in place. There would be no conflicts of interest, and longevity would not be a concern.
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