You may shy away from the notion of creating a trust because you do not consider yourself wealthy. It is true that certain types of trusts are used by high net worth individuals for tax savings and asset protection. However, trusts can also be useful for people of ordinary means. One of these is the revocable living trust.
In this post we will look at the benefits that you gain when you create this type of trust.
Probate Avoidance
If you decide to use a last will to record your final wishes, you would want to name an executor to administer the estate after your passing. The executor cannot immediately distribute resources to the heirs that are named in the will. He or she must admit the will to probate, and the probate court will supervise the administration of the estate.
Probate is a time-consuming process that can also be quite expensive. In addition to the time and the money, there is also a loss of privacy because probate records are publicly available.
When you use a revocable living trust rather than a last will, the trustee that you name in the trust agreement can distribute assets to the beneficiaries outside of probate. This is perhaps the greatest benefit that you derive when you create a revocable living trust.
Retention of Control
You may be reluctant to create a trust because you don’t want to lose control of the assets in the trust. This need not be a concern when you have a revocable living trust. Because the trust revocable, you can dissolve the trust and take back personal possession of the assets at any time.
You can also act as the trustee and the beneficiary while you are alive and well, so you control the actions of the trust, and you can take monetary distributions from the trust. The successor trustee that you name in the trust agreement will administer the trust after your passing and distribute resources to the successor beneficiaries.
Incapacity Planning
Incapacity is very common among elder Americans. If you were to become incapacitated and unable to handle your own financial affairs, interested parties could petition the court to appoint a guardian to act as your representative.
You would have no control over the choice of a guardian.
When you have a revocable living trust, you can name a disability trustee to administer the trust in the event of your incapacitation. There would be no reason for a guardianship proceeding to be convened if there was already a hand-picked representative in place.
Free Living Trust Report
If you would like to learn more about revocable living trusts, download our in-depth special report. The report is being offered free of charge, and you can access your copy through this link: Living Trust Report.
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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