In this post, we are going to look at a particular detail that pertains to the revocable living trust. Before we get there, we will provide an explanation of the benefits that a living trust can provide when you are planning your estate.
Efficient Estate Administration
There is more to the estate planning process than distributing slices of the proverbial pie. You should consider the administration phase that will unfold after your passing. This should be carefully weighed when you are making decisions.
A lot of people assume that a simple will is the best asset transfer device for people that are not multimillionaires. In reality, things are not as simple as they may appear to be on the surface when a will is used.
The executor that is named in the document will admit the will to probate after the passing of the decedent. This is a legal process that takes place under the supervision of a court, and it will take close to a year in most instances. During this interim, the heirs receive nothing.
Creditors are given time to come forward seeking payment, and the executor will establish an estate bank account. Final debts are paid, and the assets are inventoried and prepared for distribution to the beneficiaries.
When all of these tasks have been completed to the court’s satisfaction, the estate will be closed, and the executor will distribute inheritances to the people that are named in the will.
In addition to the time consumption, there is a privacy intrusion. The records are available to the general public, so anyone and everyone can find out about the details of your estate.
Probate is not free by any stretch of the imagination. It has been estimated that the expenses can consume between three and seven percent of the estate.
If you utilize a living trust as your primary asset transfer vehicle, none of these drawbacks will come into play. The trustee will be able to distribute assets to the beneficiaries simply and efficiently outside of the costly and time-consuming process of probate.
Spendthrift Protections
When you are preparing your final acts of giving, you may have concerns about the money management capabilities of someone on your inheritance list. If you use a will, they will receive a lump sum inheritance with no spending safeguards or asset protection.
This can be a cause of great concern because a person with these propensities may have nowhere to turn after making poor financial decisions. When have a living trust, you can account for this type of situation.
A spendthrift clause can be included, and the trust would become irrevocable after your death. This would protect the principal from the beneficiary’s creditors. The beneficiary would not be able to access the principal, but the trustee would provide distributions according to your instructions.
You can keep the trust active for years if you choose to do so, providing ongoing income that is generated by income-producing assets. Many people will allow for larger lump sum distributions when the beneficiary reaches a certain age under the assumption that they will have matured sufficiently.
Pour-Over Will and the Heggstad Petition
Now we can focus on the subject that we wanted to highlight. If you have a living trust, you may fail to convey some property into it before you pass away. To account for this, you should include a pour-over will that directs the assets into the trust.
Some people do not include the pour-over will, and there can be disputes even if there is such a will. In California, an estate planning attorney can file a Heggstad petition with the court contending that there is evidence that you wanted all of your assets to be held by the trust.
Schedule a Consultation Today!
Our doors are open if you are ready to work with a Burbank, CA estate planning lawyer to develop a custom crafted plan that covers all your bases. You can schedule a consultation appointment right now if you call us at 818-937-2335.
If you would prefer to send us a message, fill out our contact form and we will get back in touch with you promptly.
- Are All Asset Transfers Subject to Probate? - November 30, 2023
- Are You Prepared for the Eventualities of Aging? - November 21, 2023
- Navigating the 2024 Estate Tax Landscape - November 17, 2023
