You have options when you are planning your estate, and you should understand them thoroughly so you can make informed decisions. A lot of people assume that a last will should be the centerpiece in almost all cases unless you are very wealthy, but this is not really the case.
In many instances, a revocable living trust would be a better choice. This is just one of a number of different types of trusts, but we will focus on the revocable living trust here.
One of the misconceptions about a last will is the notion that transfers that are facilitated through the terms of a will are quick and efficient. This is patently false, because a will must be admitted to probate. The executor would handle the administration tasks, and it would be done under the supervision of the court.
This is a time-consuming process that will take more than six months even if there are no particular complications. Since the heirs do not receive their inheritances during this interim, the time lag can be problematic.
There are also expenses that accumulate during probate, including court costs, legal fees, the executor’s remuneration, appraisal and liquidation charges, and other miscellaneous debits.
Thirdly, there is a loss of privacy when probate enters the picture. Since it is a public proceeding, anyone that is interested can access probate records to find out how the assets were distributed.
These drawbacks can be avoided through the utilization of a revocable living trust. When you establish this type of trust, you could act as the trustee and the beneficiary while you are alive. You would name successors to assume these roles after your passing.
The executor would be able to distribute the resources to the beneficiary or beneficiaries outside of probate.
You may have concerns about the money management abilities of someone on your inheritance list. If you leave them a direct bequest, they could burn through the money too quickly, and they may not have any source of support to rely upon during difficult times.
With a living trust, you can include a spendthrift provision to add a layer of protection. When you establish the trust declaration, you can spell out the terms of the distributions to the beneficiary. To prolong the viability of the trust, you could instruct the trustee to distribute limited assets monthly over an extended period of time.
Plus, the principal would be out of the reach of most creditors of the beneficiary. It should be noted that assets that have been distributed would be subject to creditor claims.
A significant percentage of people become unable to effectively handle their finances at some point in time due to incapacity. To account for this possibility, you could name a disability trustee when you establish your trust. This individual or entity would step in to administer the trust in the event of your incapacitation.
Streamlined Estate Administration Process
The avoidance of probate is beneficial from an estate administration perspective, but there is another facet. When a living trust has been established and carefully funded, it is easy for the trustee to identify the property that is going to be distributed to the heirs.
On the other hand, when there is a great deal of individually owned property, the identification and inventory tasks can be considerably more complicated. It should be noted that a pour over will can be included as an accompanying document. This would allow the trust to absorb assets that were never conveyed into it.
We Are Here to Help!
These are a handful of the benefits that can be realized through the utilization of a revocable living trust. If you are interested in the possibility of creating this type of trust, we would be more than glad to help. You can send us a message through our contact page to request a consultation appointment, and we can be reached by phone at 860-548-1000.