Many people equate estate planning to the creation of a simple will, but there are other tools in the estate planning toolkit. A revocable living trust can be the ideal estate planning centerpiece for a wide range of people, and we will look at four reasons why you may want to use one in this post.
Consolidation of Assets
When you establish a living trust, you do not have to be concerned about losing control of the resources. You would act as the trustee while you are alive, so you would have absolute control of the assets every step of the way.
Since the trust would be revocable, you could dissolve the trust entirely and take back direct personal possession of the property if you choose to do so. Simply put, there are no worries when it comes to your ability to use the resources that are technically owned by the trust.
In the trust declaration, you would name a trustee to succeed you after you are gone. It can be someone that you know personally, or you could alternately use a trust company or the trust department of a bank. Your heirs would be the beneficiaries of the trust.
If you use a will instead of a living trust as your asset transfer vehicle, the assets that comprise the estate would be identified by the executor after your passing. This can be an inefficient process when there are many different forms of property that are not neatly consolidated.
On the other hand, when you use a living trust, you list all the assets on a schedule. The trust will be listed on the title documents as the owner of the property, so everything will be in order from the start.
This will ultimately benefit the heirs that will be receiving inheritances, because the trustee will be able to administer the trust in a timely and efficient manner.
No Court Involvement
A simple will is admitted to probate after the death of the testator, and the Surrogate’s Court provides supervision during the administration process. It serves a purpose, but it is less than ideal if you are named in the will as an inheritor.
No inheritances can be distributed while the estate is being probated by the court, and it will typically take about nine months at minimum. It is a public proceeding, so anyone that is interested can obtain the records, and probate expenses reduce the value of the estate.
When you have a living trust, the distributions would take place outside of probate, so these hassles would be avoided.
Unless you include a testamentary trust, the inheritors receive their bequests in lump sums all at once when a will is used. This can be a source of concern if you have people on your inheritance list that are not ready to handle large amounts of money.
This situation can be effectively addressed through the utilization of a living trust. You can include a spendthrift clause, and the trust would become irrevocable after your death. The beneficiaries would not be able to access the principal, and their creditors would be in the same position.
When you draw up the trust agreement, you can set the terms of the distributions. For example, you can instruct the trustee to distribute the annual interest accrual broken up into monthly increments, or you can set a particular dollar amount.
Many people will include these safeguards and allow for larger distributions when the beneficiaries reach certain age thresholds.
A significant percent of elders experience cognitive impairment, and physical ailments can make it impossible to effectively handle your affairs. To account for possible incapacity, you can name a disability trustee when you establish a living trust.
This individual would step into the role if it ever becomes necessary. The disability trustee can be the same individual or entity that will act as the successor after your passing, but this is not a requirement.
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Today is the day for action if you have been going through life without an estate plan. You can set up a consultation with a Staten Island estate planning attorney if you call us at 332-456-0500, and you can fill out our contact form if you would rather send us a message.