The revocable living trust is a very useful estate planning tool. Contrary to popular belief, you do not have to be wealthy to benefit from a living trust. You continue to control the assets that you convey into a revocable living trust because you can act as the trustee and the beneficiary while you are alive and well. It is possible to change the terms of the trust, and you can even dissolve the trust entirely if you choose to do so. When it comes time to create a trust, understanding these four things will help.
Funding is Necessary When You Create a Trust
Now that we have provided the necessary background, here are the specifics you need to know about funding a trust. This is an important aspect of Charlotte trust administration. When you convey assets into a trust you are essentially changing the ownership registration of the property that you want to convey into the trust. You make the trust the new owner of the property. You would typically list the property that you are conveying into the trust in the trust declaration or on an additional document called a schedule. You will act as the trustee while you are living and able so you are not surrendering control of the property.
Create a Trust Declaration the Right Way
When you create a trust declaration, you name a successor trustee to handle the trust administration tasks after you are gone, and you also name successor beneficiaries. After you pass away, the successor trustee would follow instructions that you leave behind in the trust declaration. Assets that have been conveyed into the trust would be passed along to the beneficiaries in accordance with your wishes without the need for the probate process.
Consider Including Spendthrift Provisions
You may want to consider including spendthrift protections if you use a living trust as the centerpiece of your estate plan. Many people are not very good money managers, and you may be concerned about a family member squandering his or her inheritance. If you were to make such an individual the beneficiary of a living trust, you could instruct the successor trustee to distribute limited assets over an extended period of time after your passing. In this manner, the spendthrift family member would be provided for, but he or she would be protected from his or her own bad decision-making.
Create a Trust in Order to Avoid Probate
When someone passes away, their assets are distributed to the beneficiaries in accordance with that person’s wishes. Probate is the legal process of estate administration if you rely on a will to pass on your assets. While it does provide protection, it also comes with certain drawbacks. Probate can be time-consuming. A relatively simple case can typically pass through probate in a little bit less than a year in most jurisdictions, and this is a considerable amount of time to wait for an inheritance. There are also expenses that can accumulate during probate, and it is a public proceeding. Anyone who wanted to know how you distributed your resources could access probate records to find out the details. Conveying your assets to a trust can keep those assets out of the probate process.
Join us for a FREE seminar today! If you have questions regarding funding trusts or any other trust administration matters, please contact the experienced attorneys at The Potter Law Firm for a consultation. You can contact us either online or by calling us at (704) 944-3245 (Charlotte, NC, or Huntersville, NC) or for individuals in Kentucky at (606) 324-5516 (Ashland, KY) or at (859) 372-6655 (Florence, KY).
John’s practice focuses on the use of Wills and Living Trusts in Estate Planning to help individuals protect their families and preserve their legacies after their deaths, but his practice also focuses on the critical issues of protecting individuals with dementia or other diminished capacity, assisting individuals in qualifying for Medicaid and other government benefits to offset the costs of long-term care, and providing special needs planning.
John is admitted to practice law in North Carolina, South Carolina, Kentucky, and Ohio, and he is accredited by the Department of Veterans Affairs.
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