If you are not particularly wealthy, you may assume that you should use a last will to facilitate the transfer of your monetary assets after you die. You can go this route if you want to, but the postmortem process is something to take into consideration.
The executor that is named in the will would have to admit the will to probate. This is a legal process, and it comes with a number of pitfalls. Probate can be costly, it is time-consuming, and probate records are available to the general public.
If you use a revocable living trust to transfer assets, the probate process is not a factor.
When you create a revocable living trust as a vehicle of asset transfer, you are referred to as the grantor. One of the reasons why these trusts are popular is because the grantor does not surrender personal control of the assets in the trust.
You can act as the trustee and the beneficiary while you are alive and of sound mind. As the trustee you can control the actions of the trust, and you can accept distributions from the trust as the beneficiary.
The point of the trust is to eventually facilitate asset transfers to your heirs. To make this happen, you name a successor trustee in your trust agreement.
This individual or entity will assume the role of trustee after your passing. The successor trustee would distribute assets to the successor beneficiaries in accordance with your wishes as stated in the trust agreement.
With a revocable living trust, you can also prepare for possible incapacity. The successor trustee could be empowered to administer the trust if you were to become incapacitated late in your life.
When you are choosing a successor trustee, you could select someone that you know personally. However, this can present certain difficulties. You have to be concerned about the longevity of the successor trustee, and there could be conflicts of interest.
If you utilize a professional fiduciary entity like a trust company or the trust section of a bank, you avoid these potential drawbacks. There is inherent oversight, there are no conflicts of interest, and there are no longevity issues.
Free Living Trust Report
In this post we have looked at the role of the successor trustee. If you would like to obtain more comprehensive information about revocable living trusts, we have a valuable resource that is available to you.
Our firm has prepared a free special report on revocable living trusts. If you would like to download the report, click this link: Revocable Living Trust Report.
Free Estate Planning Consultation
We would be glad to answer any questions that you have about revocable living trusts or any other estate planning matter. Send us a message through our contact page if you would like to set up a free consultation.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.