By Barry Zimmer on June 8th, 2021 in Estate Planning
If you are thinking that you are going to draw up a will at some point, you may want to consider a living trust as an alternative. This legal device provides a number of different profound benefits, and we will explain them in this post.
Efficient Estate Administration
Some people assume that you surrender personal control of assets that you convey into a trust because in a sense, that’s the whole point. You want to create separation between you as an individual and the assets that you are conveying into the trust.
This is true when it comes to irrevocable trusts, but the revocable living trust is in a different category. As the name would indicate, you can revoke or dissolve the trust after it has been created, and you would act as the trustee while you are alive and well.
One of the benefits of a living trust over a will is the efficient estate administration. You convey the assets that will comprise your estate into the trust, so there would be consolidation of ownership. This simplifies the process for the trustee.
Another major positive is the avoidance of probate. A will would be admitted to probate, and the court would supervise while the estate is being administered. This process is time-consuming, and no inheritances are distributed until the estate has been closed by the court.
Probate expenses reduce the amount of the inheritances that will be received by the heirs, and the records are available to the general public, so there is a loss of privacy.
Assets that are distributed through the terms of a living trust are not subject to probate, so the trustee can act without court supervision.
Inheritance Safeguards
Unless a testamentary trust is contained within a will, the people that are named as inheritors receive lump sum bequest all at once. There would be no safeguards going forward, so someone that is not good with money could burn through their inheritance far too quickly.
If this is a source of concern, a revocable living trust can provide you with peace of mind. You can include a spendthrift provision, and the trust would become irrevocable after your death.
The beneficiary would have no access to the principal, and their creditors would “step into their shoes.” They would not be able to reach the resources either, so the assets would be protected.
When you have a living trust, you can instruct the trustee to distribute assets in any way that you choose. For example, you can stipulate the distribution of a certain dollar amount each month, or you can provide distributions of the trust’s earnings broken up into monthly increments.
Comprehensive Solution
Even if you have a living trust, you may still be in direct personal possession of property at the time of your passing. To account for this, you can include a pour-over will in your overall estate plan.
This type of will would facilitate the transfer of the assets into the trust after you are gone, so the trust would be the centerpiece of a comprehensive estate planning solution.
Incapacity Planning
A significant percentage of elders become unable to manage their own affairs. Alzheimer’s disease strikes over 30 percent of the oldest old, and there are other causes of dementia. There are also physical ailments that can make it difficult to handle your affairs effectively.
You can account for this when you have a living trust. When you are drawing up the trust declaration, you can name a successor trustee to administer the trust after your death. This individual can also be empowered to step into the role in the event of your incapacity.
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