The revocable living trust is a very effective estate planning tool that will facilitate efficient asset transfers after your passing. Some people think that trusts are complicated to administer, but in reality, this is really not the case.
The First Phase
If you establish a living trust, you would be called the grantor or settlor. The administrator is the trustee, and even though you would be the grantor, you can also act as the trustee.
As a result, you have complete control of the assets that you convey into the trust. For example, let’s say that your checking account is held by the trust. As the trustee, you would be able to write checks as usual or withdraw funds from the account.
We are not necessarily suggesting that you should convey your checking account into a living trust; we are just painting a poignant picture for the sake of clarification.
According to the Alzheimer’s Association, 32 percent of elders that are 85 years of age and older have contracted the disease, and this is not the only cause of incapacity. To account for this possibility, you can designate a disability trustee to assume the role if it becomes necessary.
You will also name a successor trustee to administer the trust after your passing. The same individual or entity could serve the role of disability trustee and successor, but this is not a requirement.
Your heirs would be the beneficiaries of the trust. It would become irrevocable after your death, and the principal would be protected from the beneficiary’s creditors. If you choose to do so, you can instruct the trustee to provide limited distributions over time to prevent reckless spending.
Living Trust Administration
After you are gone, the trustee that you name will handle the administration tasks. We used the term “entity” as a possible trustee because trust companies and the trust department of banks provide trustee services for a fee.
In some cases, the utilization of a professional will be preferable. There would be no real or perceived conflicts of interest, and if the trust is going to remain intact for an extended period of time, the assets would be properly managed.
Shortly after your passing, the trustee will acquire copies of the death certificate, and if there is a will, the trustee will file it with the probate court. A-pour-over will should be part of your estate plan, because it will allow the trust to absorb assets that were in your direct personal possession.
The Social Security Administration of the state Department of Health will be notified, and a connection with the beneficiaries will be established. All the assets will be identified and inventoried, and they will be secured by the trustee.
For tax purposes, the trustee will obtain an Employer Identification Number (EIN), and assets will be appraised and prepared for distribution if the terms call for liquidation.
Streamlined Administration Process
One of the major benefits of a living trust as the streamlined administration process. Most of the assets will be owned by the trust, and this consolidation simplifies the situation for the trustee.
Another advantage in this regard is the avoidance of probate. A will would be admitted to probate, which is a time-consuming and expensive process that takes place under the supervision of a court.
There is also a loss of privacy, because probate records are available to anyone that is interested. When you have a living trust, the trustee can act without court supervision, so the drawbacks of probate are avoided.
Attend a Free Webinar!
Since you are here, you must be looking for information about estate planning, and we are offering some great opportunities in the near future. We are conducting a series of webinars, and you can learn a lot if you attend one of these sessions.
There is no charge, but we ask that you register in advance so we can reserve your spot. You can see the dates and obtain registration information if you visit our webinar page.
Need Help Now?
If you already know that it is time for you to work with an El Segundo estate planning attorney to put a plan in place, we are here to help. You can send us a message to request a consultation appointment, and we can be reached by phone at 310-337-7696.
- Can I Decant a Trust in California? - December 6, 2022
- Common Mistakes in Estate Planning – Part V - December 5, 2022
- Planning for the International Client - December 5, 2022
