- posted: Jun. 30, 2020
- Estate Planning
When planning your estate, you should keep in mind that the decisions you make now may place responsibilities on your loved ones when you die. Your estate will be subject to probate, a process that can take several months or longer depending on the size of the estate, and it involves court fees, attorneys’ fees and other costs. One way to spare your family from going through this ordeal is to create a revocable living trust.
Probate is a court proceeding that validates your will and appoints an executor to fulfill its terms under court supervision. Creating a revocable living trust lets you exclude some or all of your assets from probate while still distributing them to your intended beneficiaries upon your death. The distribution occurs privately and without court involvement unless disputes arise. What’s more, since the trust is revocable, you can freely amend its terms and control its assets throughout your lifetime. An experienced estate planning attorney can review your financial portfolio and other factors to determine whether a revocable living trust is advisable in your case.
In a trust agreement, the creator (known as the grantor) appoints a trustee to manage the assets according to the agreement’s terms. The trustee is a fiduciary, which means he or she holds the property for the benefit of others. In the case of a revocable living trust, the settlor is usually also the first trustee and beneficiary. That means that if you name yourself as trustee, you can manage and spend the assets in the trust during your lifetime. Upon your death, the successor trustee you have chosen takes over. The trust may then continue — paying out money to recipients on terms specified in the trust — or may be dissolved after its assets are distributed to designated beneficiaries. This type of trust can also be structured to have the successor trustee assume responsibility in the event you become mentally incapacitated.
After the revocable living trust is created, it must be funded. Funding means transferring ownership of assets to the trust. Deeds, bank accounts and all other assets you wish to include must be renamed with the trustee as owner. Since you don’t really relinquish control, the trust operates under your Social Security number and its earnings are considered part of your taxable income. However, the property remaining in the trust at your death is considered to be separate from your estate and is thus excluded from probate.
If you need assistance with a revocable living trust and other estate planning issues, the Law Firm of Joseph M. Udall, PLC in Mesa, Arizona is here to help. For a free consultation, call us at 480-500-1866 or contact us online. Saturday and evening appointments are available.