Before we address the title question, we should explain some of the advantages that you would gain if you were to use a living trust instead of a will as your primary asset transfer device.
Last Will Drawbacks
First, if you use a last will, the executor would not be able to act in a vacuum. The will would be admitted to probate, and the court would provide supervision during the administration process.
Final debts must be paid during probate, so creditors would be notified. They would be given a certain amount of time to come forward, and the executor would pay valid bills and tend to other administrative tasks.
It is important to note that the inheritances would not be distributed to the people that are named in the will until the estate was probated and closed by the court. This can sometimes take a little less than a year if there are no complications, but more complex cases can take considerably longer.
For example, the Anna Nicole Smith versus the Marshall family case was stalled in probate for about 16 years. The matter took another strange turn when there was a paternity dispute between Larry Birkhead (who turned out to be the biological father of Smith’s daughter Dannielynn) and attorney Howard Stern.
Bills pile up during probate, and this is another one of the negatives on top of the time consumption. There are court costs, legal fees, accounting charges, appraisal and liquidation expenses, and other miscellaneous debits that reduce the amount of the inheritances that will ultimately be received by the heirs to the estate.
Probate is an open proceeding. Anyone that is interested can access the records, so there is a loss of privacy. Finally, the process opens a window of opportunity for disgruntled parties that may want to present an estate challenge.
Revocable Living Trust
All of the pitfalls mentioned above are avoided when a living trust is utilized as an alternative to a last will. The assets can be distributed outside of probate, and this is the major benefit. Plus, if you create this type of trust, you can act as the trustee and the beneficiary while you are living.
Unless you include a testamentary provision, assets that are paid out through the terms of a last will would be distributed in lump sums to the people that are in line for inheritances. With a living trust, you would have the ability to instruct the trustee to pass along distributions in any manner that you choose.
A significant percentage of elders become unable to make sound decisions at some point in time, with Alzheimer’s disease being the leading culprit. When a living trust is in place, you can name a disability trustee to handle the trust management chores if you become unable to take care of them yourself.
Adding and Removing Assets
Another empowering thing about a living trust is the fact that you can add or subtract assets at any time. You should definitely make the trust the owner of any property that you acquire if you want it to be part of your estate.
This is done by amending the property schedule, and it is simple to do this if you have the assistance of a licensed estate planning attorney.
There is also a fail-safe that should be included in your overall estate plan. You can add a pour over will which would allow assets that had never been placed into the trust to be “poured over” into the device after you are gone.
When it comes to taking assets out of the trust while you are alive and well, this is easily accomplished. You would be the trustee and the beneficiary, so you would have total freedom to do what you want to do with the assets in the trust.
Attend a Free Estate Planning Seminar!
If you would like to learn more about living trusts and other important estate planning matters, attend one of our upcoming seminars. There is no charge, but we do ask that you register in advance, because space is limited. To do just that, visit our seminar page and follow the simple instructions.
- Things You May Need to Update in Your Estate Plan When You Enter Retirement - March 22, 2023
- 10 Estate Planning Tips You Cannot Afford to Ignore - March 21, 2023
- 7 Estate Planning Steps for the Beginner - March 16, 2023