by Legacy Plan Nov 25, 2016
Summary: Revocable living trusts are sometimes called “will substitutes” because they can accomplish many of the same objectives as a will when it comes to distrbuting your assets when you die. A living trust, however, can do much more than that alone. A properly created and funded living trust can also help you plan, not just for asset distribution upon death, but also for the possibility of mental incapacity during your lifetime. Your living trust can help you make sure you have a seamless system in place for the management of your assets should your health dictate that you are no longer able to make those decisions yourself.
You have many options when it comes to creating your estate plan. Each option has certain benefits, and each has its limits. As you contemplate how to go about constructing your plan, it is important to understand what each estate planning tool
can, and cannot, do for you.
One example of this is the revocable living trust. Many people may be familiar with the benefits and uses of this legal document when it comes to avoiding probate. The reality of that benefit is true. A properly crafted and funded living trust
may help you distribute your wealth to those you wish to receive it while avoiding the costs, delays and stresses that can be associated with the probate administration process. Because your trust can accomplish this goal of wealth distribution
upon the occasion of your death, similar to how a will distributes your assets when you die, that’s why living trusts are sometimes referred to as “will substitutes.”
However, calling a living trust a “will substitute” misstates, in some ways, exactly what a trust’s benefits and limits are. If you engage in the proper sort of estate planning, your trust’s benefits may not be limited simply to accomplishing
the objectives otherwise available using a will. Potentially, your trust can do much more. An area where this is clearly true is protection during your lifetime. Your will does not take legal effect until you die; it can do nothing for you while
you’re still alive. A living trust, though, has the possibility to be vitally important to you during your lifetime if you should lose your mental capacity (and ability to make decisions for yourself).
If this should happen to you, your properly funded trust can direct what will happen with regard to the management of your assets. When you establish living trusts, you will name someone (often yourself) to serve as the trustee of the trust
initially. You will also name the person (or people,) called a “successor trustee” or “successor trustees,” who you want to take over the management of these assets when you either die or are otherwise unable to make those decisions for yourself.
So, if you become mentally incapacitated, and you have funded your assets into your trust, then the process of dealing with them transitions seamlessly from you to the person or people you named in your trust document.
Without this type of planning in place, it may be necessary for your loved ones to go to court and ask a judge to appoint what’s known as a “conservator” to manage your assets. This process, which is sometimes known as “living probate,” has the
potential, just like any legal proceeding, to be time-consuming, expensive and stressful for you and your family. By planning to avoid the negative impacts of living probate, your living trust can be a lot more than just a will substitute.
This article is published by the Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with
an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services-company and is not a lawyer or law firm and is not engaged in the practice of
law. For more information about this and other estate planning matters visit our website at www.legacyassuranceplan.com.