If you have always assumed that you will be expressing your final wishes in a simple will, you should explore the benefits that living trusts provide before you make any final decisions. In this post, we are going to share four compelling reasons why a living trust can be a better option.
Efficient Estate Administration
A will must be admitted to probate after the passing of the testator. The executor that is named in the document acts as the estate administrator, and the probate court provides supervision.
During probate, creditors are notified about the passing of the decedent via a notice to creditors that is published in a newspaper. In Oklahoma, they are given two months to come forward. Our other office is in Kansas, and the time frame in that state is four months.
The executor has to identify (in other words, “find”), inventory, and prepare the assets for distribution to the heirs. Final taxes must be paid during probate and those returns are not due until April 15 in the year following the date of death. Clearly, all of this takes time, and the inheritors do not receive anything while the probate process is underway.
In addition to the waiting game drawback, expenses accumulate during probate, thereby reducing the value of the estate. Challenges to the Last Will can be presented, and anyone that has a purported interest in the estate can access probate records to obtain information about the terms of the will. Probate is a matter of public record.
These hassles do not enter the picture when a revocable living trust is used as an alternative to a will as an asset transfer device. The successor trustee that is named in the document would perform many of the duties required to settle an estate but do so outside of court-supervised probate.
No Loss of Control
Some people do not even consider the possibility of using a trust because they think that they no longer have access to assets that they convey into their trust. This is true with some types of trusts, but the grantor of a revocable living trust has total and complete control over the trust every step of the way.
If you establish a living trust, you would be the trustee and the beneficiary while you are alive and well. As the trustee, you would have the ability to manage assets owned by the trust. As the beneficiary, you retain the right to spend the money generated by trust assets. The “revocable” designation is self-explanatory. You can modify or amend the trust at any time. You can revoke the trust in its entirety and reassume direct personal control over the assets. At that point, the trust would no longer exist.
The terms of a revocable trust are not rigidly set in stone after you originally establish the trust. You can alter the beneficiary and/or trustee designations, and you can transfer additional property into the trust.
Generally speaking, inheritances that are passed along to children or other heirs through the terms of a will would be distributed in lump sums. This can be a source of concern if you are going to be leaving a bequest to someone who is not financially mature with money.
A living trust can include a spendthrift provision that would shield the principal from the beneficiary’s creditors. You would have the power to instruct the trustee to distribute limited assets over an extended period of time if you choose.
Unfortunately, 10 percent of seniors contract Alzheimer’s disease, and the number goes up to 32 percent for people that are 85 years of age and older. If you have a living trust, you can name a disability trustee that would assume the role in the event of your incapacity. Again, you avoid the risk of subjecting your assets and your life to a living probate – a guardianship and/or conservatorship.
Attend a Free Webinar!
If you would like to learn more about the estate planning process, we are offering some great learning opportunities in the near future. Our attorneys are conducting a series of webinars, and we urge you to attend the session that fits into your schedule.