Setting up a revocable living trust has many advantages as we enter our older ages and become faced with choices about our own care in the event of decline, as well as transferring assets to others. Read on to understand the basics of revocable living trusts and the ways in which they can be more helpful than simply making a will.
Trust Basics for Everyone
Trusts, in general, can be the “MVP” of estate planning, and for many of us, a revocable living trust offers an especially good and flexible way to both plan for our own needs as we age, and to designate assets for beneficiaries. As the terminology implies, a living trust is one that we establish during our lifetimes, and making a trust revocable enables us to change it as our circumstances unfold. Investopedia offers this quick summary of trust basics as a foundation for planning:
A trust is a legal entity with separate and distinct rights, similar to a person or corporation. In a trust, a party known as a trustor gives another party, a trustee, the right to hold title to and manage property or assets for the benefit of a third party, the beneficiary….A living trust, also called an inter-vivos trust, is a written document in which an individual’s assets are provided as a trust for the individual’s use and benefit during their lifetime. A trustee is named when the trust is established; this person is in charge of handling the affairs of the trust and transferring the assets to the beneficiaries at the time of the trustor’s death.
Though it typically takes more time and effort to set up and transfer assets to a trust, than it does to create a traditional will, attorney Larry Parman observes that establishing a revocable living trust can be well worth the effort, noting: “A living trust is a versatile tool….From maintaining privacy to avoiding probate, it provides solutions that can simplify estate planning and administration…..Far too many people decide they are going to use a simple will as an asset transfer method. They never consider a revocable living trust because they don’t understand the benefits.” In addition to enabling the flexibility to change the trust arrangements as life evolves, other key benefits of a revocable living trust, according to Parman, include:
Privacy Protection….
Unlike a will, which becomes public record during the probate process, a living trust allows you to keep the details of your assets and beneficiaries confidential…..By sidestepping probate, you ensure that your financial matters remain private, reducing the risk of disputes….
Avoiding Probate
Probate can be a lengthy and costly process for your loved ones, and a living trust allows your estate to bypass probate entirely. This means your assets can be distributed according to your wishes without court intervention….
Ensuring Continuity in Case of Incapacity
….A living trust can protect you and your assets if you become incapacitated. If you experience a medical condition that renders you unable to manage your affairs, the successor trustee you appoint can step in seamlessly and provide for your care. This arrangement allows for the continued management of your financial matters without the need for a court-appointed guardian.
Appointing A Trustee or Successor Trustee
When choosing a trustee or successor trustee, it is important to consider a reliable person who deeply understands the intentions of the trust and can be counted on to administer the trust accordingly. Unless the assets placed in a trust are complex, financial expertise is not necessary for a trustee, but having time and being organized and diligent are. Ultimately, whether a friend, relation or professional is selected, the trustee has a fiduciary obligation to the beneficiaries—and must always exercise reasonable care and skill in managing the assets of the trust. Accordingly, the trust agreement may require a trustee bond, which is a specific type of fiduciary bond that protects the interests of the trust and its beneficiaries in accordance with applicable state law. As a leading national provider of many types of fiduciary bonds, Colonial Surety makes it easy and efficient to obtain a trustee bond. Just get a quote online, fill out the information, and enter a payment method. Print or e-file the bond from anywhere.
Good To Know: Probate Vs Probate Litigation?
Routinely, probate is simply the legal, public process that settles our affairs when we die. Most states offer expedited processes depending upon the level of assets involved. When families are communicating and have had a chance to get organized, probate generally proceeds smoothly. Probate litigation cases are unfortunate, but it’s important not to confuse them with probate itself. Justia points out that complications during probate generally stem from “high-risk factors” such as “sibling rivalry, second marriages, and dysfunctional families.”
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