Many people believe that having a will is all that is needed for a proper estate plan. The reason for that belief may be a lack of knowledge about other estate planning tools like the revocable living trust.
Wills take care of asset distribution to beneficiaries upon the death of the will’s creator. Revocable living trusts function before and after death with control of the trust terms in the hands of the document’s originator. A trust that is revocable is one that may be changed or revoked during the document creator’s lifetime. Once the originator of the trust dies, the terms within the trust are solidified and cannot be altered. Provisions within the trust will direct the flow of assets.
Trusts are frequently used in estate plans to preserve assets that might otherwise end up in probate. People who crave privacy also depend upon trusts to keep estate matters among a trusted few individuals including trust beneficiaries, heirs and trust administrators.
Beneficiaries of assets may not be capable of caring for them at the time the assets are given. A trust allows its creator to dictate conditions for the release of trust assets.
Money for children may be placed in a trust until they are old enough to use it responsibly. That provision may hold true for minors as well as young adults who could be tempted to spend and squander the assets they receive.
A trust may also be employed to aid an individual in the event of incapacity. A person who is alive but financially incompetent is protected by a revocable living trust. A designated person can be named to help manage the trust during the creator’s life and beyond.
A supplement to the revocable living trust should include powers of attorney. This names an individual – or more than one – to decide financial and health matters in place of an incapacitated person.
Source: blogs.sacbee.com, “Do I need a revocable trust?” Claudia Buck, Nov. 5, 2012