In reality, there are different types of trusts. Indeed, there are trusts that are used by wealthy people who have to address complicated tax situations and other matters. These would be Irrevocable Trusts.
However, there is another type of trust called a Revocable Living Trust that can be quite useful for a wide range of people who are not extraordinarily wealthy. In this post, we will look at some of the benefits that you can realize if you use a Living Trust as the centerpiece of your estate plan.
No Loss of Control
It would be logical to assume that you lose control of assets that you convey into any type of trust, because the intention is to separate the assets from your own personal possession for legal purposes. When it comes to Revocable Living Trusts, this is not the case.
As you can clearly see from the name of the trust, if you ever want to, you can revoke or rescind the trust entirely and it would no longer exist. You could walk away with the assets in your direct personal possession once again.
You would be creating the trust as an estate planning tool, so you would probably never want to dissolve it. However, you would not lose control of the assets in the trust while you are living, because you can act as the trustee and the beneficiary while you are alive and fully capable of handling your own affairs.
In the trust declaration, you would name a successor trustee to administer the trust after you are gone, and you would name successor beneficiaries to receive distributions from the trust after your passing.
One major advantage that you gain if you utilize a living trust instead of a will is the ability to instruct the trustee to distribute limited assets over an extended period of time. This would prevent the beneficiaries from burning through their inheritances too quickly. Plus, the trustee would manage the assets in the trust, so you would have a steady hand at the helm.
Many people will use a corporate trustees such as a trust company or the trust segment of a bank. When you have a corporate trustee administering the trust, you can be certain that the trust will be managed in accordance with professional standards.
A will must be admitted to probate after the passing of the testator. This is the legal process of estate administration.
This process protects certain interested parties, but it can come with some drawbacks. Probate is time-consuming; it will take close to a year even if there are no complications. The heirs cannot receive their inheritances while the estate is being probated by the court. There are also significant expenses that can arise during probate. These expenditures reduce the inheritances that will be received by the inheritors.
When a Living Trust is used as an asset transfer vehicle, the successor trustee can distribute assets to the beneficiaries outside of probate.
Preparing for Incapacity
Alzheimer’s disease strikes around 45 percent of people who are at least 85, and the disease is not the only cause of incapacity. Many people become unable to handle their own financial affairs late in their lives, and you can account for this when you establish a living trust.
It would be possible to empower a disability trustee to administer the trust if incapacity strikes.
Attend a Free Estate Planning Webinar!
Our attorneys are holding a series of webinars over the coming weeks, and we are looking forward to connecting with many new people as we share some very important information. You can learn a lot if you attend one of these sessions, and best of all, they are being offered free of charge.
You can visit our webinar page to see the dates. Simply click on the one that you would like to attend and follow the simple instructions to reserve your seat.