TRUSTS ATTORNEY PHOENIX
A Trust is part of an estate plan
A revocable living trust is an important element of your estate plan. It allows you to give your assets to your family and loved ones after you pass with minimum hassle during a stressful time.
What Are the Elements of a Revocable Living Trust?
There are three important roles when creating a trust.
- The trust maker - you - is the person who places assets into the trust;
- The beneficiary/beneficiaries are the people who the trust is meant to support; and
- The trustee is the person who is in charge of administering the trust
You should speak with your trustee(s) ahead of time to ensure that they understand their duties and responsibilities, as well as your wishes for how the trust is to be administered. Although I draft trusts with easy to understand English, there can be confusion and miscommunication, which is why it is important to discuss any questions or concerns ahead of time.
The trust will also have assets placed into it. These can include:
- Real property, including the family home;
- Personal property;
- Stocks and bonds;
- Life insurance payouts; and
- Other financial accounts, including bank accounts.
Benefits of a Revocable Living Trust
There are a number of benefits to creating a revocable living trust.
One of the reasons many of my clients choose to put their assets into a revocable living trust is because they can change the terms of the trust as their life circumstances change.
For example: Bob and Linda have three minor children. The happy couple puts their assets into a trust to provide living expenses for the children if something should happen to them. Years later, the children are now adults with children of their own. Bob and Linda decide to change the terms of the trust so that some funds will pass to their children, but the majority of their trust will now benefit their grandchildren’s college education.
Direct How You Want Your Funds to Go
Additionally, a trust allows you to give direction to your loved ones to ensure they are taken care of after you pass. It’s estimated that 50% of people who receive inheritances squander the money. By placing money or other assets into a trust, you are setting limits on what it can, and cannot, be used for.
Parents of young children will often put funds into a trust that will be distributed in stages as their children age. This ensures that their children are supported, and that the funds are used wisely. Grandparents may also set up additional trusts specifically for their grandchildren’s college education. Pet owners may decide to establish a trust specifically to support their furry friends.
One of the biggest benefits of a revocable living trust is that everything in your trust will avoid going through probate after you pass. Probate can take several weeks and is an additional hassle for your grieving family. Because probate is a court procedure, all documents regarding your estate will be publicly available.
Assets in a trust do not belong to the deceased, and will not go through probate because they are not part of your estate. The beneficiaries of the trust will have access to the assets, and your estate will not be a part of public court records.
This is one of the major differences between a revocable living trust and a last will and testament. Your last will lets you distribute your assets as you wish after you die, but assets distributed this way could be subject to probate.
Note: if you have minor children, a last will and testament is the only way to list a guardian if something should happen to you. Because of this, my clients will often prepare both a trust and a last will to ensure their children are protected to the fullest extent possible.
Other Estate Planning Documents
A trust is only one element of an estate plan. Other documents typically included in an estate plan are:
In your power of attorney documents, you will give permission to your agent(s) to make financial and health care decisions on your behalf. In your medical living will, you will give your loved ones permission to let you die peacefully and painlessly.
Each document has a unique and important role to play in your estate plan. When you create a trust, you are looking after your loved ones, but in your power of attorney documents and your medical living will, you are looking after yourself.
When you come to my office, I will discuss all of your options with you in plain simple english, and give you the flexibility to decide what the best options are for you and your family. My goal is to make sure you understand everything we will be doing. If you would like to make an appointment, contact me today to get started.
Is There Any Downside To a Revocable Living Trust?
- It generally has more pages than a Last Will.
- There is about a couple of hours of work you need to do after you sign a Revocable Living Trust to make sure it works properly.
- Pretax retirement accounts, like 401Ks and IRAs, have better distribution options for humans than for Revocable Living Trusts.
My opinion is that the upside of a Revocable Living Trust outweighs any potential downside. A Revocable Living Trust is simply a more efficient, comprehensive way to handle your affairs. It is the legal version of one stop shopping.