Exploring the flexibility of living trusts
Today’s post takes a closer look at revocable living trusts, sometimes referred to simply as living trusts.
As readers may know, a revocable trust can be modified at any time because the grantor retains complete control over the trust assets and terms. It can even remain unfunded during the grantor’s lifetime. However, that retained control comes at a price: this type of estate planning tool does not offer the tax saving advantages of an irrevocable trust.
However, a living trust still offers benefits that a last will and testament simply can’t provide. Like a will, a living trust can specify how an individual wants assets to be distributed to his or her beneficiaries. However, the beneficiaries do not have to go through probate to claim those assets after the trust grantor’s passing. That means less paperwork, more privacy from avoiding court involvement, and probably less expense.
Another delay associated with probate can be the process of creditors coming forward to assert claims to the estate. That, too, might be avoided with a living trust.
A living trust also offers the reassurance of a second opinion from the named trustee. Although a grantor can serve as the trustee, the trust document can name a successor trustee in the event of the grantor’s incapacity. That trustee can take over control, if needed, managing the trust assets pursuant to the terms of the trust document.
A trust generally must specifically identify its assets, such as bank accounts, stocks or other securities, and real and personal property. Of course, an individual may continue to acquire assets after a living trust has been created. To account for that contingency, a living trust might be combined with a pour-over will. The will might direct that any assets in the grantor’s name should be added to the trust at the time of his or her death.
Source: Time, “Why this Estate Planning Tool Beats Just Having a Will,” Kerri Anne Renzulli, Oct. 6, 2014