The revocable living trust is a very popular estate planning device, and some of the benefits are widely understood. You avoid probate when you use a living trust, so there is no court involvement, and this streamlines the administration process.
Another benefit is the ability to include spendthrift protections because there is asset protection after you pass away, and you do not have to provide lump sum inheritances all at once.
In addition to the major advantages, there are some other things about living trusts that you should know and will take a look at five of them here.
The Terms Are Flexible
When you establish a living trust, you will name a trustee to succeed you, and you add beneficiaries. You also dictate the way that the assets will be distributed to the beneficiaries after your passing.
Along the way, things can change in a number of different ways, and you can adapt the trust to match the circumstances. You can convey property into the trust after it has been created at any time, this can be done by adding it to a schedule.
You can also change the terms, and relatively minor changes can be made through the utilization of an amendment.
If the change that you want to make is very significant, like the complete disinheritance of a beneficiary or the inclusion of a new spouse, a trust restatement may be necessary.
You Can Account for Disability
While you are alive and well, you will act as the trustee of your living trust. You are obviously going to name a successor trustee to assume the role after your passing, and you can also cover another one of your bases.
Unfortunately, a significant percentage of elders become unable to handle their own affairs eventually. Cognitive impairment is not uncommon among the oldest old, and there are other types of incapacity.
When you establish the trust, you can name a disability trustee to act as the administrator if you become unable to do so yourself. This can be the same individual or entity that will serve as the successor trustee, but you could potentially designate another party.
A Joint Living Trust Can Be Ideal for Married Couples
If you are married, you and your spouse could establish a joint living trust. This can be a good choice if you have a good bit of property that you own jointly and you intend to leave your respective personal interests to one another.
You would act as co-trustees, and the surviving spouse would be the sole trustee after the death of a spouse. Personal separate property that is conveyed into the trust could be inherited by any beneficiary or beneficiaries that you name.
You Can Account for Outside Assets
At the time of your passing, you may have some property in your personal possession that you never conveyed into the trust. With this in mind, you can take the right steps to prevent a tangled situation.
You can add a pour-over will, and this will facilitate the transfer of the assets into the trust. The probate court would be involved, but it would be a simple and straightforward matter.
In California, there is another possibility. A Heggstad petition can be filed with the court to contend that the decedent intended to transfer property into the trust.
They Are Relatively Inexpensive to Create
A lot of people do not consider the possibility of using a trust because they think that the legal fees associated with trust creation are exorbitant.
In fact, most of our prospective clients are pleasantly surprised when they learn about our rates, and a properly constructed estate plan can save your family money in the long run.
Attend a Free Webinar!
We are conducting some webinars over the coming weeks that are being offered free of charge, and you can learn a lot if you attend one of these sessions.
You can see the dates if you visit our Los Angeles estate planning webinar page, and when you identify the one that works for you, follow the instructions to register.
- What Can I Do to Prevent Probate Disputes After I Am Gone? - June 1, 2023
- Understanding and Manipulating Estate and Gift Taxes - June 1, 2023
- What It Means to Disclaim - June 1, 2023