“Reasons to Use a Revocable Living Trust” by Attorney Colleen Sinclair Prosser
There are many reasons to use a Revocable Living Trust as an estate planning tool. Let’s talk about a few.
The first and most commonly thought of reason is probate avoidance. This is an important reason but not the only reason people think of to use a Living Trust. At death, the assets titled in the name of the individual must go through the probate process to retitle the assets to the appropriate people who’ve inherited them. In some states this process may be rather simple, while in other states it may be cumbersome. There may be substantial legal and court costs associated with the probate process, as well.
- Another reason to use a living trust is privacy. A trust is a private document. A will, on the other hand, must be filed in the probate court before it is determined to be valid. This process is a public process (except in very rare circumstances). Thus, everyone who wishes may know the contents of the will and the assets which were part of the probate estate. So, for example, they would know about the child born out of wedlock who received an inheritance or the child who was disinherited because of a family dispute. The nosy neighbor would know the family secrets and could spread information about a family that they would rather keep private. Also, predators would know how much money beneficiaries are inheriting. For example, they might know that a financially irresponsible beneficiary is inheriting $200,000 and could be approached for money. So, if a client is at all concerned about privacy, a Living Trust will serve their needs better than a will.
- Incapacity planning is an important reason to use Living Trust. A will does nothing to help with incapacity planning. As is often said, a will only “speaks” at death. So, if the testator is not dead, the will does not control anything, even if the testator is incapacitated. Conversely, a trust can provide for the management of the assets upon the grantor’s incapacity. This is one of the great benefits of a trust compared to a will. The trust can have whatever standard is desired to determine incapacity. For example, it could require the certification of one or two physicians.
- A trust can provide a vehicle for the management of assets during life and after death. Often, even if a creator of a Living Trust has capacity, they may reach a time in their life when they no longer wish to manage their assets. A trust provides a simple mechanism for this to happen. The grantor, the person who sets up the trust, typically serves as the initial trustee. The grantor resigns as trustee and the person who was named as the successor trustee is notified and takes on the management responsibilities of the Living Trust.
Colleen Sinclair Prosser offers years of experience in estate preservation and transfer. A strong proponent of the living trust, she also focuses on wills, powers of attorney, living wills, probate, trust administration, prenuptial agreements, nursing home planning, and special needs planning.
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