When it comes to the positive side of the ledger, a living trust can provide freedom and versatility. The person who establishes a living trust is called the grantor. The trustee is the trust administrator, and the beneficiary is the person who can receive monetary distributions from the trust. The grantor of a living trust will typically act as the trustee and the beneficiary throughout his or her life, so there is no loss of control.
Many elders become unable to handle their own financial affairs at some point in time. With a living trust, you can empower a disability trustee to administer the trust in the event of your incapacitation, and this is a benefit.
You name a successor trustee to handle the estate administration tasks after you are gone, and you name successor beneficiaries. After your passing, the successor trustee could distribute assets to the beneficiaries outside of the process of probate. This is another major positive, because probate is time-consuming, and it can be expensive.
If you have concerns about the money management capabilities of a beneficiary, you can include spendthrift protections when you establish a living trust, and this is yet another positive.
Now we will look at some of the things that a living trust cannot accomplish. A living trust is revocable, so you can dissolve the trust and take back direct personal possession of property that you conveyed into it. In legal parlance, you are retaining incidents of ownership because of this arrangement.
As a result, assets in a living trust would be part of your estate for estate tax purposes. The resources would be subject to attachment if you were to be sued, and the assets in a revocable living trust would be counted if you were to apply for Medicaid to pay for long-term care.
Medicaid eligibility is important to many seniors, because Medicare does not pay for living assistance.
There are irrevocable trusts that can be used to satisfy these estate planning objectives.
Free Special Report
If you would like to obtain some more detailed information about the pros and cons of living trusts, download our special report. This free special report will provide an added layer of information, and you can obtain your copy through this website.
To access your copy of the report, click this link and follow the simple instructions: Free Report on Revocable Living Trusts.
- Be Discerning When You Choose an Executor or Trustee - June 10, 2021
- Can a No-Contest Clause Really Prevent an Estate Contest? - June 8, 2021
- What Happens If You Pass Without a Will? - May 25, 2021