The revocable living trust is an estate planning device that is ideal for a wide range of people. Contrary to popular belief, you do not have to be very wealthy to benefit from the utilization of this type of trust, and it is relatively inexpensive to work with an attorney to create a living trust.
While you are living, you would be the trustee of your trust, so you would be in complete control of the assets. You can sign additional resources over to the trust at any time, and you can take assets out of the trust. And of course, this is a revocable trust, so you can dissolve it entirely.
You have to account for the administration of the trust after your passing, so you name a successor trustee in the trust declaration. This can be someone that you know personally that is willing. Actually, a beneficiary can serve as a trustee, and in some cases, this is the best way to proceed.
In others, you may want to use a professional fiduciary. Private professional fiduciaries, trust companies and the trust departments of banks provide trustee services for a fee. If the trust is going to remain active for an extended period of time and it is well-funded, a pro trustee can be the clear-cut choice. A professional is also a good idea if there is not a great relationship between a beneficiary trustee and the other beneficiaries.
There would be no longevity concerns, and there wouldn’t be any conflicts of interest. Plus, if there are income-producing assets in the trust, a qualified financial professional would make sense.
When you have a living trust, all or most of the assets that comprise the trust estate would be held under the same umbrella. This will streamline the estate administration process, and you can include a pour over will in your estate plan. It will facilitate the transfer of assets that were in your direct personal possession at the time of your passing into the trust.
In California, if important assets are inadvertently left outside of the trust, a Heggstad petition can be filed on behalf of a decedent with a living trust. It would make the contention that the decedent intended to convey property into the trust but never got around to it. The contention would be bolstered if there is a pour over will as well.
One of the major benefits that a living trust will provide is the avoidance of probate. If you use a will to record your final wishes, the executor will assume a role that is similar to that of a trustee. The executor would be required by the state to admit the will to probate.
While the executor is handling the estate administration tasks, the court will examine the will to determine its validity. If anyone wants to contest the will, they can make a case while the estate is being probated.
The executor will obtain an Employer Identification Number from the Internal Revenue Service so final debts can be paid. Creditors will be notified about the passing of the decedent, and they are given time to come forward.
No inheritances are distributed while the estate is in probate, and this will take about nine months even if there are no complications and up to three years if there are complications. Probate expenses will typically consume between three percent and seven percent of the value of the estate, and this is another drawback.
If you use a living trust instead of a will, probate would not be a factor. The trustee would administer the estate independently without court supervision, so the pitfalls of probate would never enter the picture.
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