A living trust is a highly effective, versatile device that is the ideal estate planning centerpiece for a wide range of people. When you have a living trust, you would act as the trustee while you are living, so there is no loss of control of the assets.
We are going to look at the way that you can account for assets that are left out of a living trust in this post. But first, we will provide an overview of the benefits to pique your interest.
Living Trust Benefits
A living trust is the ideal alternative to a simple will because it provides advantages that you would surrender if you use a will as your asset transfer vehicle. One of them is the ability to effectively provide for your loved ones without giving them lump sum inheritances.
When you have a living trust, you can include a spendthrift clause, and the trust will become irrevocable after your passing. The creditors of the beneficiaries would not be able to reach the principal, and you would dictate the terms of the distributions.
For example, you could provide a certain amount each month, or you could allow for distributions of the annual earnings broken up into monthly increments. The terms could allow for larger lump sum distributions when the beneficiaries reach certain age thresholds.
Another benefit is the avoidance of probate. This is a costly and time-consuming legal process that would bog down the administration of the estate if you use a will.
You can name a disability trustee to administer the trust if you experience cognitive impairment or some other type of incapacity. In addition to the avoidance of probate, the administration is simplified because of the asset consolidation.
Assets Outside of the Trust
Another advantage is the ability to continue to sign property over to the trust as you acquire it over the years. In spite of this freedom, you may pass away while you are still in direct personal possession of property that you never conveyed into the trust.
If you do nothing to prepare for this possibility, the full probate process would be necessary to administer that portion of the estate.
Plus, if some of this property is located in another state, ancillary probate may be necessary. This involves multiple probate processes taking place simultaneously in different states.
A disability trustee would not be able to manage property that is not contained within the trust, so this is another disadvantage.
Obviously, it is best to make sure that you convey all of your property into the trust, but there is an effective way to account for the property that is not in the trust. You can include a pour-over will in your estate plan, and this would allow the trust to absorb the property.
The probate court would still be involved, but the process would be simplified and streamlined.
Attend a Free Webinar!
You found your way to this site because you are looking for information about estate planning. This blog is updated on an ongoing basis, and there are other written materials you can access free of charge.
We encourage you to take advantage of these resources, and there is another way that you can come away with a great deal of useful information.
Attorney Barry Zimmer is conducting a series of webinars over the coming weeks. You can learn a lot if you attend one of these free sessions, and you will be entitled to a complimentary one hour remote consultation if you stay until the end.
You can see the schedule if you visit our webinar page, and when you identify the session that works for you, follow the instructions to register.
Need Help Now?
If you have already decided that it is time for you to work with a Cincinnati estate planning lawyer to put a plan in place, we are here to help. You can send us a message to request a consultation appointment, we can be reached by phone at 513-721-1513.
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