People often harbor misconceptions about the nuances of estate planning, and this can lead to bad decisions that yield negative consequences. One of them is the idea that you would never want to use a trust unless you are extremely wealthy. Folks that are under this impression assume that a last will is the only logical choice if you are not a multimillionaire.
There is a kernel of truth in this line of thinking. High net worth individuals do use trusts of various kinds to satisfy complex aims, but there is another type of trust called a revocable living trust that can be very useful for “the rest of us.”
No Loss of Control
One thing that scares people about trusts is the notion that you surrender control of assets that you convey to any type of trust. This is simply not the case when it comes to a revocable living trust.
As the name would indicate, you have the power of revocation, so you can dissolve the trust at any time and re-assume direct personal possession of the property that you conveyed into it.
This is not the only way that you control the trust. The administrator is called the trustee, and you can serve as the trustee while you are still living. You can also act as the beneficiary and receive monetary distributions from the trust. Along the way, you can change the terms or sign property over to the trust after it has been created, so you have total freedom and flexibility.
If you use a last will to state your final wishes with regard to the way that your assets will be distributed after you pass away, you would name an executor in the document. Your executor would not be allowed to act independently. The will would be admitted to probate, and the court would provide supervision during the estate administration process.
There are a few different pitfalls that go along with probate, and one of them is the waiting game that must be played. It takes about eight or nine months for the court to probate and close an estate, and no inheritances can be distributed during this interim.
Probate is a public proceeding, so anyone that wants to pry into your final affairs can obtain probate records to find out how your resources were distributed. There are a number of costs that accumulate during probate, and it opens a window of opportunity for disgruntled parties that may want to challenge the validity of the will.
All of these drawbacks are avoided if you go with a living trust instead of a last will as the centerpiece of your estate plan. The trustee that you name to succeed you would be empowered to distribute assets to the successor beneficiaries outside of the costly and time-consuming process of probate.
Another nice thing about a living trust is the ability to protect a loved one that could be described as a spendthrift. You can include a clause that would protect the principal from the beneficiary’s creditors, and you could instruct the trustee to distribute limited assets to the beneficiary over an extended period of time. If you choose to do so, you could allow for larger, lump sum distributions when the beneficiary reaches certain age thresholds.
Unfortunately, a very significant percentage of elders become unable to make sound decisions at some point in time. You can account for this if you establish a revocable living trust. A disability trustee can be named that would step in to act as the administrator if you ever lose your decision making capacity.
Attend a Free Seminar!
As you can see, a living trust can be a great choice for a wide range of people. If you would like to learn more about them, attend one of our upcoming seminars. There is no admission charge, so you have a great deal of information to gain and absolutely nothing to lose.
Visit our seminar schedule page to obtain all the details. When you identify the date that works for you, follow the simple instructions to register so that we can reserve your seat.