You should act in a fully informed manner when you are planning your estate. If you make assumptions without thoroughly investigating all of the facts, you may make less than ideal decisions. For example, you may assume that you should use a last will instead of a living trust because you are not extraordinarily wealthy. In fact, a living trust can be a good choice for reasonably successful people who are not multimillionaires.
When you create a revocable living trust, you enjoy a number of different advantages. For one, you do not lose control of the assets in the trust. You can act as the trustee, so you administer the trust, and you can act as the beneficiary as well.
To facilitate asset transfers after you pass away, you name successors to assume these roles after you are gone. You could name a person that you know to act as the successor trustee, but you could alternately use a professional fiduciary such as a trust company.
As the creator or grantor of the trust, you have total control of the circumstances. In the trust declaration, you leave behind instructions that the successor trustee would be compelled to follow after you pass away. The ability to control the actions of the trust after you are gone is another one of the benefits.
For example, you may not want your beneficiaries to receive their inheritances all at once. If you feel this way, you can instruct the trustee to distribute limited assets on a monthly basis for an extended period of time. You could allow for additional distributions under hardship circumstances if this is your choice.
This is just one hypothetical scenario, but the trustee will ultimately follow your instructions, whatever they may be.
In a very real sense, you decide when your living trust will terminate. If you were to allow for limited distributions over an extended period of time, the trust could terminate whenever the funds were exhausted.
You could instruct the trustee to distribute all of the assets to the beneficiaries when they reach certain age thresholds, and the trust would terminate after the trust administration tasks were completed and all of the assets were distributed to the beneficiaries.
If you wanted the beneficiaries to receive all of the assets in the trust immediately after your passing, the living trust would terminate as soon as the trustee distributed all of the resources.
Another advantage that you gain when you use a living trust is the ability to account for latter life incapacity. You could empower the successor trustee that has been named, or a different person or entity, to act as the trustee in the event of your incapacitation.
Of course, this trustee would only have the latitude to manage the trust. You may have assets that have not been conveyed into it for one reason or another. With this in mind, a well-constructed incapacity plan will include a durable financial power of attorney. The agent that is named would be empowered to handle your financial affairs if it ever become necessary. Many would select the same person or entity to act as the disability trustee and durable POA agent.
In addition to the financial side of things, you should add a durable power of attorney for health care decision making along with a living will. With this type of will, you state your preferences regarding the use of life sustaining measures. You would also want to execute a HIPAA release to allow your agent to access your medical records.
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