Estate Planning – Revocable Living Trust
A revocable trust can be used not only to avoid probate but to help transition the management of a person’s assets if that person should become unable to manage them. A revocable trust passes through three stages in its existence.
During stage one, the person establishing the trust (the grantor) is alive and competent and often serves as the trustee, and as trustee has the power to use assets in any way that the trustee sees fit and/or change the provisions of the trust agreement, or even end the trust.
During the second stage, if the grantor has become incompetent or no longer desires to manage his or her financial affairs, a successor trustee will step in. The successor trustee is most often a family member or bank, and the successor trustee assumes control of the trust assets and uses the assets of the trust to provide for the grantor’s care and support.
The third and final stage of the trust begins at the grantor’s death. Upon the grantor’s death, the successor trustee assumes control of the assets of the trust and is required to pay the grantor’s funeral expenses, debts, taxes, and expenses of administering the trust. The remaining trust assets are then distributed to the designated beneficiaries of the trust. The trust agreement contains the same plan for asset distribution that a will would contain, but because the assets are held in the name of a trust a probate is not necessary.
The decision of whether to use a will or a revocable trust should be based on a person’s individual situation. Trusts can be more appropriate in some situations, while wills may be more appropriate in others. Our attorneys can help guide you through this process and determine what strategy best fits your needs.