People often think of estate planning as an exercise in document creation. Indeed, you have to execute a last will or some type of trust to express your final wishes in a legally binding manner. This being stated, it is also important to consider the estate administration process, because someone has to make sure that all of your assets are distributed in accordance with your wishes.
If you were to use a last will, you would name an executor to act as the trust administrator. This can be a very difficult assignment for someone that has never acted in this capacity before. The trustee would be required to admit the will to probate, and the Surrogate’s Court would provide supervision.
There are very specific legal steps that must be taken, so a probate lawyer will often be engaged by the executor. Another way to approach the estate administration process when you have a will would be to arrange for a professional fiduciary to guide the estate through probate. This would be a trust company or the trust department of a bank.
The executor must identify and inventory all of the assets that comprise the estate. This can be a very complicated task when all of the resources are scattered about as it were. It can also be time-consuming, and it is an imperfect science.
Speaking of time, the heirs to the estate cannot receive their inheritances until the estate has been probated and closed by the court. Even if everything is very efficiently handled, it will take close to a year in most cases, but that can be extended if it is challenging to round up all of the assets that will be transferred.
Revocable Living Trusts
To avoid these difficulties, you could choose to utilize a revocable living trust instead of a last will. Many people feel a bit nervous when they hear the word “trust,” because they do not want to surrender control of their assets while they are living.
You do not have to worry about this if you establish a living trust, because you can act as the trustee and beneficiary while you are alive and well. On top of this, since the trust is revocable, you can rescind or dissolve the trust at any time and take back direct personal possession of the property that was conveyed into it.
In the trust declaration, you name a trustee to succeed you after you are gone, and your heirs would be the successor beneficiaries. If you convey all of your property into the trust, the trustee would have everything that they need at their fingertips. There would be no need to spend a lot of time trying to identify assets.
Plus, when it comes to assets that may have never been conveyed into the trust, you can include a pour over will. This would allow the trust to absorb these assets after your passing so that everything can be consolidated in one place.
In addition to the efficiency, there are other benefits that a living trust provides over a last will. Many people become unable to handle their own financial affairs toward the end of their lives because of the impact of Alzheimer’s disease or some other condition. When you have a revocable living trust, you can name a disability trustee. This individual or entity would be empowered to handle the trust administration tasks if you ever become incapacitated.
Another benefit is the ability to include spendthrift protections. Let’s say that you have someone on your inheritance list that has a tendency to let money slips through his hands much too quickly. You may be concerned about the prospect of this loved one burning through his inheritance at a breakneck pace.
As a response, you could instruct the trustee to distribute only the earnings from income producing assets that have been conveyed into the trust to the spendthrift beneficiary. If you choose to do so, you could give the trustee the latitude to make additional discretionary distributions.
Attend a Free Seminar!
If you would like to learn more about living trusts and other important estate planning topics, we have some good news for you. Our estate planning attorney is holding a number of informative seminars over the coming weeks. They are free to attend, so you have everything to gain and nothing to lose if you sit in on one of these sessions.
Though there is no charge, we do ask that you register in advance so that we can reserve your seat, because the seminars fill up fast. To see the schedule and obtain registration information, visit our seminar page.