A living trust is a very versatile estate planning tool that can satisfy a number of specific objectives, and we will look at three of them in this post. Consider a living trust if you want to reap the benefits that it can provide to you and your family members.
Protect a Spendthrift Heir
You may not have any problem leaving a direct, lump-sum inheritance to most people on your inheritance list. However, if you have someone in the family that is not a good money manager, this may be a source of concern.
If they burn through their inheritance too quickly, you will not be around to provide financial assistance, and they may have nowhere to turn.
Under these circumstances, you could make this person the beneficiary of a living trust with a spendthrift provision. In the trust declaration, you can leave instructions with regard to the way you want the assets to be distributed to the beneficiary.
Some people will allow for distributions of earnings that are generated by income-producing assets in the trust. They may provide larger, lump sum distributions when the beneficiary reaches a certain age plateau. These are a couple of thoughts, but you can include any stipulations that make sense to you.
The trust would become irrevocable after your passing, and creditors of the beneficiary would “step into their shoes.” Since the beneficiary would not have direct access to the principal, their creditors would not be able to reach the principal either.
When a simple will is used, it would be admitted to probate after the passing of the testator. This is a legal process that takes place under the supervision of a court.
The court makes sure that the will is valid, and creditors are given a chance to come forward seeking satisfaction. Without question, probate serves a purpose, but it is a bit problematic for the rightful heirs.
Probate is time-consuming, and no inheritances can be distributed while probate is underway. Expenses accumulate that reduce the value of the estate, and probate records are available to the general public.
When a living trust is utilized, the trustee can distribute assets to the beneficiaries outside of probate, so the drawbacks are avoided.
Streamlined Estate Administration
If you have a living trust and you think ahead with the estate administration process in mind, the trust will own the assets that will be distributed to your heirs. When the time comes, the trustee will step into a turnkey situation, because asset ownership will be consolidated.
Of course, you may acquire assets along the way that you never conveyed into the trust. You can account for this through the inclusion of a pour-over will. This would direct the property into the living trust after your passing.
Attend a Free Webinar!
We are conducting a series of webinars over the coming weeks, and you can learn a lot if you attend one of these sessions. The experience couldn’t be any more convenient, and this is an investment of time that will pay significant dividends.
There is no charge to attend our webinars, but we ask that you register in advance so we can reserve your spot. To see the schedule and obtain registration information, visit our webinar page and follow the simple instructions to register.
Need Help Now?
If you are ready to discuss your objectives or are ready to consider a living trust, with a Burbank, CA estate planning lawyer, we are here to help. You can send us a message to request an appointment, and we can be reached by phone at 818-937-2335.