Far too many people assume that a will is the right estate planning document to use unless you have complicated holdings or unusual objectives. In fact, the revocable living trust is the ideal estate planning centerpiece for a wide range of people, and we will look at the benefits here.
Streamlined Estate Administration
You probably want your loved ones to receive their inheritances in a timely manner after you pass away. After all, the assets were yours, why should they be stuck in limbo for months on end?
They would in fact be frozen if you use a will, because it would be admitted to probate. It will usually take at least nine months for an estate to be probated by the court, and no inheritances are distributed during that interim.
Expenses reduce the value of the estate before it is transferred to the inheritors, and privacy is lost, so because probate records are available to anyone that has an interest.
These drawbacks are completely avoided if you use a living trust to facilitate postmortem asset transfers. The trustee would distribute the assets to the beneficiaries after you are gone, and the probate court would not be involved.
In addition to the avoidance of probate, all the assets would be held by the trust, and this would simplify the inventory and preparation process.
No Loss of Control
The creator of a living trust is called the grantor, and the administrator is the trustee. If you are the grantor of a living trust, you would act as the trustee while you are alive, so you would have complete control of the assets.
You would be able to change the terms, and you would have the ability to convey additional assets into the trust at any time after it has been created.
Account for Incapacity
A very significant percentage of seniors become unable to handle their affairs eventually due to cognitive impairment. Over 30 percent of the oldest old suffer from Alzheimer’s disease, and this is not the only underlying cause of dementia.
This is not a very pleasant subject to contemplate, but it is best to face the eventualities of aging head-on.
You can account for this possibility when you have a living trust. When you are establishing the trust, you can name a disability trustee to assume the role if it ever becomes necessary.
This can be the same individual or entity that will serve as the successor trustee after your death, but this is not required.
The inheritors that are named in a will would receive lump sum inheritances all at once when the estate has finally been probated and closed by the court. If you are not sure about the money management capabilities of the people on your inheritance list, this can be a problem.
A living trust is very useful if you want to protect heirs that may not be ready to handle large sums. You can include a spendthrift provision, and the trust would become irrevocable after your death.
The beneficiaries would not be able to touch the principal, and this would also apply to their creditors. To prevent reckless spending, you could instruct the trustee to distribute a certain amount each month, or you could dictate some other incremental distribution arrangement.
We Are Here to Help!
As you can see, the revocable living trust can provide many benefits, but at the end of the day, it is just one of many tools in the estate planning toolkit.
Each situation is unique, and the right approach will depend upon the circumstances. Personalized attention is key, this is what you will receive when you choose our firm.
If you are ready to get started, you can schedule a consultation at our Smithtown, New York estate planning office if you give us a call at 631-265-0599. There is also a contact form on this site that you can use to send us a message.