A revocable living trust is an effective and versatile estate planning tool that can be the ideal foundation of your plan. If you establish the trust while your children are still minors, there would be an adult trustee designated that would be empowered to manage assets on their behalf.
It is equally effective after your children become adults in their own right. You would be the trustee while you are living, so you would control the assets in the trust. Because it is revocable, these resources would not be protected from creditors or other litigants seeking redress.
That’s not the reason why these trusts are so widely utilized. One of the benefits is the streamlined estate administration. A will is admitted to probate, which is a time-consuming and expensive public legal process. Anyone that is interested can access the records, so there is a loss of privacy.
When you have a living trust, the successor trustee that you name in the trust declaration would distribute the assets to the beneficiaries outside of probate. As a result, the drawbacks would be avoided, and you can dictate the terms of the distributions.
When a will is used, the beneficiaries receive lump sum inheritances. The grantor of a living trust can dictate the terms of the distributions, so you could provide limited monthly payments to prevent reckless spending and poor money management.
Another benefit of a living trust is the ability to prepare for latter life incapacity. Sadly, many elders become unable to handle their own affairs eventually, and guardianship proceedings are sometimes initiated.
When you have a living trust, a disability trustee can be given the power to administer the trust in the event of your incapacity. This will typically be the successor trustee that is named in the trust declaration, but this is not a requirement. You could name someone else to act as a disability trustee.
Now that we have explained why you may want to use a revocable living trust in the first place, we can address the point of this post. You can convey property into the trust after the initial funding, but you may fail to do so for some reason or another.
If you pass away while you are still in direct personal possession of property that has not been conveyed into the trust, it would be subject to probate. You can avoid the full probate process and cover this base if you include a document called a pour-over will.
This type of will is used to assert your desire to have the assets transferred to the trust. The probate court would be involved, but it would be a rubberstamped formality.
Another remedy for a failure to convey assets into a living trust is the filing of a Heggstad petition. This petition would contend that you had every intention of conveying the property in question into the trust, and in California, these requests are frequently granted by the court.
Your estate representative would have recourse if you cannot convey all of your property into the trust. At the same time, you should make an effort to make this unnecessary.
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