Living trust attorneys help clients on a number of different levels. Before we get into the matter of estate administration, we should first explain why you may want to utilize a living trust as an alternative to a last will.
Spendthrift Protections
Most families are not perfect. You may have someone in your family who is not good at handling money. Plus, people who are generally levelheaded can sometimes make bad decisions when they experience a significant improvement in financial status. They may spend a little more liberally, and they could get bad financial advice.
When you are planning your estate, these possibilities can be a source of concern. If you maintain direct personal possession of your property, and you arrange for its distribution through the terms of a will, the heirs would receive direct, lump sum inheritances. The inheritors could potentially squander their inheritances, because there would be no protections in place.
Things are different if you utilize a revocable living trust as your primary estate planning tool. When you establish a living trust, you are called the grantor or settlor of the trust. The trust administrator would be the trustee, and the beneficiary or beneficiaries would receive monetary distributions from the trust.
People who do not understand all of the facts sometimes assume that you lose control of assets that you convey into a living trust, but this is not the case. You can act as the trustee while you are living, and you can also act as the beneficiary.
To account for the administration of the trust after your passing, you name a successor trustee, and you name a successor beneficiary. If you want to protect the successor beneficiary from bad decision-making, you can include a spendthrift provision when you create the trust.
If you want to, you can instruct the trustee to distribute assets on a limited basis to prolong the viability of the trust. For example, let’s say that you have conveyed income producing assets into the trust. You could allow the trustee to distribute the earnings of the trust while the principal remains intact.
In this manner, the beneficiary would have assets to draw from for the long haul. Plus, there would be a certain level of asset protection from the beneficiary’s creditors due to the spendthrift provision.
Trust Administration
The choice of the successor trustee is a very important one, and you should give it a lot of thought before you make any snap decisions. Legally, any competent adult can act as a trustee, and you might automatically think that you should name someone that you know personally.
This is possible, but many people find that this is really not the best choice when they examine all of the facts. First of all, do you know someone who is qualified to administer a living trust? Secondly, you have to consider the anticipated longevity of the trustee that you name.
There can also be partiality issues if there are multiple beneficiaries, and there can be conflicts of interest if you use a family member or close family friend.
Living trust attorneys will always inform clients about the possibility of using a corporate trustee instead of an individual friend or relative. There are banks that offer trust administration services, and there are also trust companies.
The utilization of a professional fiduciary can bring many benefits. First and perhaps foremost, the assets in the trust would be handled by a certified financial professional. Plus, you can be certain that the corporate trustee will be in existence for the duration, and this is another positive.
A corporate trustee is not going to have any conflicts of interest, and there would be no partiality issues. Corporate oversight will be in place, and banks and trust companies have to work within government regulations, so there is a strong level of security.
Learn All the Facts
When you understand all of the benefits that you gain if you use a living trust as your primary estate planning tool instead of a last will, you may see things in an entirely different light.
Our firm is very committed to education, and you can learn a lot if you explore our website. A section of the site houses an electronic library that contains numerous different comprehensive estate planning and elder law special reports. One of these publications is dedicated to the subject of living trusts.
The report is being offered free of charge, and you can click this link to get your copy: Free Report on Living Trusts.
- Updating Your Plan: Powers of Attorney - July 22, 2021
- Updating Your Plan: Your Trust or Will - July 22, 2021
- Will Medicaid Pay My Child for Providing Care? - July 2, 2021
