A living trust is a legal document executed with the help of an experienced attorney. It can be a very effective estate planning tool when coupled with a simple will that “pours over” your assets into the trust. For any person with accumulated assets, a living (“inter vivos” is the legal term) trust can do a marvelous job keeping your financial affairs private while efficiently transferring assets following your plan after your death. Having a will that defers to the living trust at death can also greatly lessen the expense and duration of the probate court administration process.
A will goes into effect only after one’s death but a living trust can protect your interests if you become mentally or physically incapacitated by directing how to manage your finances and provide for your needs. A living trust also provides a significant level of control because when you act as trustee of your own revocable living trust, you are free to buy and sell assets, amend the trust or even cancel it at any time. This is why it is called a revocable living trust.
A common pitfall of those who establish a living trust is that they fail to fund the trust. This involves moving (also known as re-titling) assets such as your home or farmland, bank and investment accounts, into ownership by the trust. Yes, this does add to the expense and it does take some time and effort, however, it is critically important for the trust to work as it should.
For many who establish a living trust, it can make sense to name a co-trustee or successor trustee. While a relative or friend can ably serve, a corporate or institutional trustee, like a trust department at a bank, provides the kind of experience and objectivity that can make it an attractive option.
While the revocable living trust is a time-tested planning tool, your estate plan should be personalized to fit your particular situation so please consult your advisors. For more information about how a living trust may benefit you – please contact me at firstname.lastname@example.org.