Different types of trusts are used in the area of estate planning, and they all serve their own purposes. Revocable living trusts are very popular among people who want to facilitate asset transfers outside of probate. If you use a last will to state your final wishes, the executor that you name in the document must admit the will to probate. The probate court will subsequently supervise the administration of the estate. But many clients ask, what will happen to your living trust when you die? Let our living trust attorneys explain the process for you.
A living trust can be used to avoid probate
The probate process can be time-consuming and costly, and it is public. Anyone who is interested can find out how you planned your estate. To avoid these pitfalls, you could use a revocable living trust. When you create this type of trust, the trustee can distribute assets to the beneficiaries outside of probate. You could also account for possible incapacity when you have a revocable living trust. You would give a disability trustee the power to administer the trust in the event of your incapacitation.
Funding a Living Trust
When you fund a trust, you convey assets into the trust. The assets become the property of the trust, but you still have access to them throughout your life because you can dissolve the trust if you choose to do so. You can also act as the trustee and the beneficiary initially and keep complete control. To fund a living trust, you would list the assets in the trust declaration and you would change the ownership registration. You would make the trust the owner of the assets. Sometimes the assets are listed in a separate document called a schedule. It is also possible to transfer the assets to the trustee in the trust agreement and remember, you can act as the trustee while you are living.
Who Administers My Living Trust When I Die?
The living trust is an estate planning tool that you should explore if you want to be fully apprised of your options, even if you are not very wealthy. There are some significant advantages that you gain when you use a living trust instead of a last will as the centerpiece of your estate plan — not just avoiding probate but also asset protection for your beneficiaries after you are gone. The person you select serves as trustee and administers the trust after you die.
Do I need a joint living trust?
If you are married, and you share ownership of most of your valuable property with your spouse, you may want to create a joint living trust. Under these circumstances, you and your spouse could act as co-trustees. When a joint living trust is created, the surviving co-trustee would administer the trust after one spouse passes.
Creating your trust declaration
When you create a living trust, you construct a trust declaration. If you are creating a living trust on your own, you would name a successor trustee in this declaration, and you would name successor beneficiaries. You would also leave behind instructions that the trustee would be compelled to follow with regard to the way you want the assets transferred after you die. This is a major benefit because you could include spendthrift protections if you have concerns about the beneficiaries. After your passing, the successor trustee would distribute assets among the beneficiaries in accordance with your wishes.
Choosing a Successor Trustee
You should think carefully when you are choosing your successor trustee. If you name someone that you know personally, there may be certain drawbacks. In some cases, there can be conflicts of interest, and the longevity of the trustee could be a source of concern as well.
Of course, if you do not know anyone who would be a suitable candidate, you could go a different direction. There are professional fiduciary entities that offer trust administration services. If you use a corporate trustee like a trust company, you can avoid some of these potential pitfalls.
Join us for a FREE seminar today! If you have questions regarding living trusts or any other estate planning 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 (for Charlotte, NC or Huntersville, NC) or for individuals in Kentucky at (606) 324-5516 (Ashland, KY) or at (859) 372-6655 (Florence, KY).