revocable trusts

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Helping clients plan for their family's future, by creating an efficient, thoughtful and comprehensive estate plan that preserves their legacy and gives them peace of mind.

Control of Assets and Trusts

Control of assets is a key issue in deciding on a trust.  Any trust created while the person, known as the “grantor,” is living, is known as a “living trust.” However, the term is also used interchangeably with “revocable trusts,” which can be changed according to the grantor’s wishes. During the lifetime of the grantor, as explained in the recent article “Control of Assets a Key Issue in Deciding on a Trust” from FED Week, that person can be the trustee as well as the beneficiary. Control is retained over the trust and the assets it contains.

Trusts are used in estate plans as a way to avoid probate. Equally importantly, they can provide for an easier transition if the grantor becomes incapacitated. The co-trustee or successor trustee steps in to manage and control assets, and the process is relatively seamless. The family, in most cases, will not have to apply for conservatorship, an expensive and sometimes unnerving process. Within the privacy afforded a trust, the management and control of assets is far less stressful, assuming that the trust has been funded and all assets have been placed properly within the trust beforehand.

Naming a successor trustee so the grantor may remain in control during his or her lifetime is an easier concept for most people. However, adding a co-trustee rather than a successor may be a wiser move. A successor trustee requires the grantor, if still living, to formally resign and allow the successor trustee to take control of the trust and its assets.

If a co-trustee is named, he or she may step into control instantly, if the grantor becomes incapacitated.

Trusts fall into two basic categories:

Irrevocable Trusts—A permanent arrangement in which assets going into the trust are out of control of anyone but the trustee. Giving up this control comes with benefits: the assets within the trust may not be tapped by creditors and they are not considered part of the estate, also lowering tax liability. Irrevocable trusts are generally used to protect loved ones, who are named as beneficiaries.

Revocable Trusts—The grantor retains control of assets and may collect investment income from assets in the trust. If the grantor decides to have the assets back in his or her personal accounts, they can be reclaimed into his or her own name.

The revocable trust protects the grantor against incapacity, as the successor trustee or co-trustee can take over management of trust assets and assets pass to designated recipients without having to go through probate.

Determining which of these trusts is best for your family depends on many different factors, including control of assets.

Speak with an experienced estate planning attorney to learn how trusts might work within your unique estate plan.

Reference: FED Week (Jan. 21, 2021) “Control of Assets a Key Issue in Deciding on a Trust”

 

What Is Estate Planning and Is It for Everyone?

A key objective of estate planning is to make certain that your assets go to those you want, rather than distant family. It also can minimize taxes, so your beneficiaries can keep more of your wealth. Finally, sound estate planning can decrease family fighting and provide clear end-of-life directives, if you become incapacitated before you die.

Bankrate’s recent article entitled “What is estate planning?” gives us a look at estate planning and why you absolutely need it, regardless of how much wealth you have. Here are a few of the most common elements of an estate plan and what you should consider.

Beneficiary designations. When you open a financial account, checking, savings, brokerage, or insurance account, you’ll be asked to name a beneficiary for the account. This person will get any funds from the account at your death. You can have multiple beneficiaries and should also name contingent beneficiaries in case the primary beneficiaries are not living when you pass away. Naming a beneficiary supersedes any other declaration in your estate.

Will. This is another key document in the estate plan. When you die, it instructs where your assets will go. Property that’s owned jointly, such as with a spouse, passes directly to the surviving owner(s). A Personal Representative will be appointed to carry out the will and manage the distribution of assets.

Trusts. This is a legal vehicle that allows a third party (the trustee) to hold assets for a beneficiary. They give you several estate planning options, including avoiding probate and privacy. Trusts also let you direct how your assets are distributed after your death. You can also name the trustee(s) to manage and direct the trust on your passing. Ask your experienced estate planning attorney to help you with your trust questions and to create one, if it is a good idea.

Living wills. In the event you become incapacitated, you should have a clear statement of your wishes. A living will states how you want to be treated during your end-of-life care, such as specific treatments to take or refrain from taking. A living will is often combined with a designation of health care surrogate, which can allow a surrogate to make decisions on behalf of the incapacitated individual.

Estate planning can help avoid many issues from arising, even if you don’t have a lot of money. By determining how you want to handle your estate before you die, you’ll save your loved ones a lot of effort, expense and stress concerning how your estate is distributed.

Reference: Bankrate (Aug. 3, 2020) “What is estate planning?”