Revocable living trusts – commonly known as living trusts – can be a very useful asset management and probate/succession avoidance tool.
By establishing a revocable trust and retitling your assets to that trust, when you pass away those assets can be transferred to your heirs without your property (held in trust) being under the control of the court or the State. Your heirs will have complete access to them without having to wait for an order of the Judge. Plus, during your life, you still have complete access to those accounts if you designate yourself as the trustee of that trust.
Keep in mind there are two requirements: The first is that you need to have the trust established while you are alive; and Second you must retitle the assets in the trust. I meet with many people who tell me they have a trust set up but a closer look reveals that they never funded the trust or over time they moved their assets to different financial institutions and did not remember to keep the trust as the account owner. If the trust exists but everything you own is held outside the trust, then you’ve effectively accomplished nothing.
Finally, another benefit of the trust is that as you age and need assistance with handling your finances, you can designate alternate trustees. Those alternates will not need to go through the same scrutiny with financial institutions as your agents under power of attorney must when presenting your power of attorney document, because financial institutions will have already reviewed the trust document when it was created and have retitled the accounts in the trust name. This makes for a much simpler transition should, for example, you need your children to step up and begin assisting you in handling your finances, which could occur suddenly. Over the last few years, banks and brokerage firms are increasingly scrutinize powers of attorney which may not be drafted specifically enough for their policies, causing them to refuse to honor them. In many cases your parent or loved one may no longer have the capacity to execute a new power of attorney. The trust can avoid this potential problem.
The living trust is an important consideration for any senior estate plan but like any strategy it is not a one size fits all solution. Sitting down with a competent elder and estate planning attorney who is familiar with all the issues faced by seniors – estate and inheritance taxes as well as long term care – can help you to decide if this type of plan is right for you.
Call Michele Blanchard for Consultation 985-641-4010.