When you are planning your estate, you have different options with regard to the legal device or devices that you use to facilitate the transfer of assets. One option is a last will, but you may want to consider a revocable living trust as an alternative.
Let’s look at the value of a living trust, and we will also pass along some useful information about the trust administration process.
Why Use a Living Trust?
The process of probate is something to be aware of when you are planning your estate. With some exceptions, if you die in personal possession of property, even if you have a will, the property will not be distributed to the heirs until the estate has been probated.
During probate, the court will examine the will to determine its validity. If you do things properly, you will name an executor or personal representative to administer the estate when you create your will. This individual will handle the administrative tasks under the supervision of the court.
Probate is time-consuming, and it can be costly. These are the primary reasons why many people choose to avoid it. This can be done through the creation of a revocable living trust.
Revocable living trusts facilitate the transfer of assets to the beneficiary or beneficiaries outside of probate. However, some people overemphasize the drawbacks of probate. If you work with an estate planning attorney to prepare your estate with probate in mind, things can actually run relatively smoothly.
The avoidance of probate is not the only benefit that you gain if you use a living trust as your primary estate planning tool. Spendthrift protections are part of the equation. A living trust will become irrevocable after you die, and the trust can include a spendthrift provision. There would be a layer of asset protection, and you could allow for long-term, limited distributions over time.
The anatomy of a living trust includes the grantor, who is the person who creates the trust. The grantor names a trustee to administer the trust, and a beneficiary who will receive monetary distributions from the trust.
The grantor of the trust can act as the trustee and the beneficiary while he or she is still alive. This is what most people do, and as a result they don’t lose control of the assets while they are living.
After the grantor passes away, the successor trustee and beneficiaries that are named by the grantor in the trust agreement will assume these respective roles.
Who should act as your trustee? The name itself says a lot. The trustee is going to be administering the monetary assets that have been conveyed into the trust so the trustee must be reliable and honest.
You may first think about naming someone that you know as trustee. You can do this, but you may also want to consider the utilization of a professional fiduciary entity such as a bank or a trust company.
There can be conflicts of interest if you choose someone that you know. The trustee could pass away before you do, and or the trust could outlive the trustee.
When you use a professional trustee, you can be sure that the funds are handled appropriately with full oversight, and you don’t have to be concerned about the ongoing capabilities of any one person.
You should certainly give the matter a lot of thought before you make any decisions. If you feel as though you could use some professional advice, contact a licensed estate planning attorney.
Guiding Your Successors
Even if you carefully select a trustee that you feel totally comfortable with, your family is probably going to need some guidance after your passing to initiate the trust administration process. When you are working with an estate planning attorney to initially establish the trust, you could think ahead so that you can provide a turnkey situation.
The attorney who established the trust would be fully informed with regard to your assets and your wishes, so he or she would be uniquely qualified to provide assistance.
Free Trust Administration Report
We have provided a foundation in this relatively brief blog post, but there is a more comprehensive source of information available through this website. Our firm has prepared an in-depth special report on trust administration, and you can obtain your copy with a simple click of your mouse. Visit this page to get your copy of the report: Trust Administration Report.