One of the most versatile and effective estate planning tools is the revocable living trust. If you have never considered the benefits, you are probably going to be pleasantly surprised. A living trust can be a much more comprehensive solution than a last will, even if you are not extraordinarily wealthy.
Spendthrift Protections
If you are going to be leaving an inheritance to a loved one that is not good at managing money, you will probably take pause. What would happen if they burn through their inheritance too quickly?
They have often come to you for support over the years, and you will no longer be there to help. Plus, they tend to run up bills, and creditors could go after their inheritance even if they don’t spend it all.
You can put these concerns aside if you utilize a living trust as the centerpiece of your estate plan instead of a last will.
It would be possible to include a spendthrift clause along with instructions for the trustee to follow after your passing. A typical way to proceed would be to allow the trustee to distribute the earnings from the principal of the trust to the beneficiary on an incremental basis.
In this manner, the principal or corpus would remain intact to keep producing income, and the spendthrift beneficiary would have no access to it. When it comes to the creditors, they would “step into the shoes” of the beneficiary. Since the beneficiary would not be able to access the corpus, the same dynamic would apply to the creditors.
Incapacity Planning
Once you reach the age of 67, your life expectancy is at least 85 years. The Alzheimer’s Association tells us that four out of every 10 people that are 85 years of age and older have contracted the disease. This is a major cause of incapacitation in elders, but there are others.
While it is not the most pleasant prospect to consider, incapacity is a looming threat to the oldest old. It is prudent to take steps to prepare for this eventuality in advance, and this can be easily done when you have a living trust. You can empower a disability trustee to act as the trust administrator if you ever become unable to make sound financial decisions on your own.
Streamlined Planning for Married Couples
If you are married, you and your spouse could choose to establish a joint living trust. You could serve as co-trustees and co-beneficiaries while you are both alive and well. There are many different ways that such a trust could be structured, but we will look at the most common one here.
Control of all the jointly owned property in the trust would fall to the surviving spouse/trustee after the death of one spouse. The desired distribution of personal property would be spelled out in the trust agreement. In many cases, the surviving spouse would keep the trust intact and make the children the final beneficiaries. As we stated, this is one possible arrangement, but there are other possibilities.
Attend a Free Webinar!
Our estate planning trust attorneys do everything possible to provide educational opportunities to members of our community. This is because so many people are unprepared from an estate planning perspective. When they understand more about the process, they tend to take action, because they find out why it is so important.
To this end we are holding a number of webinars in the near future. You can learn a lot if you attend one of these sessions, and they are being offered free of charge. We invite you to visit our webinar schedule page to get all details.
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