In spite of the above, people often brush the prospect of trust creation aside because they harbor misconceptions. In this post, we will provide some sound information so you can make a fully informed decision.
The structure of a revocable living trust is quite efficient. A living trust is administered by a trustee. If you establish a revocable trust, you can act as the trustee while you are alive and fully capable of making sound decisions. There would be no loss of control, because you would be the trust administrator.
In addition to the trustee, the anatomy of a revocable trust also includes a beneficiary, or multiple beneficiaries. The trustee can distribute assets that are contained in the trust to the beneficiaries. You can act as the beneficiary as well if you establish a living trust.
The objective is to use the living trust as an estate planning tool so you address the things that will take place after you pass away when you establish the trust. You name a successor trustee to take over the trust administration tasks after you are gone, and you name heirs as the revocable trust beneficiaries.
One major advantage that you gain if you use a revocable living trust is the ability to include spendthrift protections. A will would facilitate lump sum distributions to the people who are named in it. There would be nothing stopping creditors from attaching these inheritances, and the inheritors would be free to spend their bequests at will. Poor money managers could burn through their inheritances far too quickly.
Things are entirely different if you convey property into a revocable living trust so that it can be distributed among the beneficiaries after you are gone. When you name a successor trustee, you can empower someone that you know personally, but there is another option available to you. You could engage a professional fiduciary like a bank or a trust company.
There are a number of different advantages that you gain if you use a corporate trustee. These entities are federally regulated, and the asset managers are certified professionals. A corporate trustee would have no emotional attachment, and there would be no favoritism or conflicts of interest.
You can protect a spendthrift when you establish a revocable trust. A spendthrift provision can be added, and the trust would become irrevocable after you pass away. The trustee would control the assets in the trust in accordance with instructions that you set forth when you create the trust agreement. The level of control that you give to the trustee is entirely up to you.
Since the trust would become irrevocable, the assets in the trust would be protected from the beneficiary’s creditors. This is one form of protection, but you can also prolong the viability of the trust. It would be possible to instruct the trustee to invest the assets that have been conveyed into the trust and distribute the earnings to the beneficiary or beneficiaries over an extended period of time.
Some people will instruct the trustee to start to distribute larger lump sums when the beneficiaries reach certain age thresholds. You could also give the trustee the discretion to distribute additional assets when certain circumstances exist.
Joint Revocable Living Trust
If you are married and you and your spouse own most of your valuable property jointly, you may want to create a joint revocable living trust. There are various ways that the trust could be structured, but when simple circumstances exist, the spouses can act as co-trustees. When one spouse passes away, the surviving spouse would become the sole trustee.
Under typical circumstances the surviving spouse would assume control of the jointly owned property, but each spouse could direct the desired distribution of personally held property that is contained within the trust.
Another advantage that you gain if you create a revocable trust is the ability to prepare for incapacity later in life. You could empower the successor trustee to take over the trust administration tasks if you ever become unable to make sound decisions on your own late in your life.
Learn More About Living Trusts
If you would like to obtain more detailed information about living trusts, download our special report. This report is being offered free of charge at the present time, and you can click this link to get your copy: Ashland, KY Living Trust Report.
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