Maintain Control with a Revocable Living Trust

One alternative to a will-based estate plan is the living trust. It may avoid many of the expenses and pitfalls inherent in utilizing the basic will, which is subject to the probate process. The primary benefit of the living trust is that, if properly created and utilized, it avoids probate. As opposed to a will, which is basically a set of instructions to your personal representative (often carried out under court supervision), a trust is essentially a contract between the grantor (which is you) and the trustee (which is you during your lifetime).

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Maintain Control with a Revocable Living Trust

One alternative to a will-based estate plan is the living trust. It may avoid many of the expenses and pitfalls inherent in utilizing the basic will, which is subject to the probate process. The primary benefit of the living trust is that, if properly created and utilized, it avoids probate. As opposed to a will, which is basically a set of instructions to your personal representative (often carried out under court supervision), a trust is essentially a contract between the grantor (which is you) and the trustee (which is you during your lifetime).

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What is a Revocable Living Trust?

Although they are legally binding documents, trusts often do not require the same court intervention and supervision that wills require, because they typically do not need to be “proved” or administered by the court. Instead, the trustee who you name has full authority to act on the trust’s directions. Additional potential benefits of the living trust may include the reduction, or in some cases, elimination of federal estate taxes.

The trustee is the person or entity with the legal right to possess and manage the trust assets, and ultimately, to distribute them. Prior to death or incapacity, the grantor of the trust is also the trustee of the trust. Therefore, while living, a person who sets up a living trust retains complete control over all trust assets. A successor trustee is named by the grantor to take over control in the event of death or incapacity of the initial trustee.

The successor trustee is under a fiduciary duty (a legally enforceable duty of utmost loyalty) to the beneficiaries. This duty obligates the successor to follow the grantor’s instructions left in the trust document, and to obey all relevant and applicable state laws.

The final parties to the trust agreement, the beneficiaries, possess equitable interests in the trust assets. This means that, although the trustee controls the assets while they are in the trust, the beneficiaries are the ultimate recipients of the assets, and will receive them according to the trust’s terms.

Structure of a Trust

Shadow figure depicting a single grantor/settlor/trustee.

Settlor / Grantor / Trustee

Person establishing, funding, and controlling the trust.

Shadow figure depicting the Successor or the person controlling all assets.

Successor Trustee

Person controlling the trust assets at death or incapacity of original trustee. This is the person YOU designate.

Shadow

Beneficiary

Person designated to receive trust assets at death of grantor. This is the person or persons YOU designate.

Unlike a will, which only provides directives to pass assets at the time of your death, the living trust is actually set up as owner of your assets. Once you sign the Declaration of Trust, then you may begin transferring assets into it. As the initial trustee of your living trust, you will have full use of all of your assets. You can continue to make all decisions regarding your assets, investing, buying, selling, etc.

An additional benefit of the trust is that you may appoint successor trustees. You may appoint anyone whom you trust. If you should die or become incapacitated, your living trust will survive, and the successor trustee will have the authority to make decisions on your behalf in accordance with the terms of your trust agreement.

Possible advantages or uses of living trusts:

  • Acts as a single coordinated estate plan
  • Allows you to maintain control
  • Avoids death probate
  • Avoids living probate - guardianship – conservatorship
  • Manages assets and avoids probate in multiple states
  • Keeps your estate private
  • Difficult to contest - disinherited heirs
  • Provides for adult disabled children
  • Provides for minor children
  • Protects rights of unmarried couples
  • Protects rights of same sex partners
  • Reduces or eliminates of federal estate taxes
  • Reduces or eliminates court costs
  • Reduces or eliminates attorney’s fees
  • Reduces or eliminates delays at death

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