THE LIVING TRUST
ACTION POINTS
- “A living trust…is more flexible and more private than a will. It affords you, your assets, and your heirs greater protections should you become incapacitated. A living trust can help you sidestep certain legal obstacles and saves time, anxiety and money.” ---- Consumer Reports, 2015
- The Revocable Living Trust (i.e., Family Trust, Living Trust, or Loving Trust): A Revocable Living Trust names a person called a trustee to hold the title and/or ownership to assets and property in “trust” for the benefit of other persons, known as beneficiaries of the trust. Almost any type of property can be placed into a revocable living trust, i.e., cash, stock, bonds, real estate, corporation stock, etc. Under this type of trust, the property can be added to the trust or withdrawn from the trust at any time during the lifetime of the maker of the trust (The Trustor). This transfer of ownership of property enables you, the creator of the trust, to deal with assets, as you desire from time to time. As such, this Revocable Living Trust can be amended or changed anytime during your lifetime, but if it is to continue after your death, it then becomes irrevocable. And once it is irrevocable, the trust can provide benefits that are locked into place for your family’s benefit, according to your previous trust instructions. In this way, the administration of such a trust is not interrupted by your death, and your trust beneficiaries are normally entitled to receive immediate benefits from the trust (no delays as experienced with the probate process).
TO ILLUSTRATE:
- Let me tell you about two estate cases I experienced at the same time a few years ago: In the month of February, a number of years ago two women died for which I had responsibility. Each had estates valued at about $300,000. One woman had named the bank as executor of her estate and the other woman named the bank as successor trustee of her living trust. As executor we had to hire attorneys and take the estate through probate. In spite of the uniform probate code and claims that probate is now easier and less costly, it took over 13 months to work through probate and it cost 10% of the gross estate for probate expenses (she had two small pieces of property in other states and so we had what is called ancillary probate). With the woman’s estate who had a living trust, we were able to distribute the trust estate in its entirety within a month of her death (without any probate), and the trustee fee was less than 1% (typically living trusts use family members as successor trustees and family members don’t commonly charge a trustee fee).
- This comparison of a probated estate versus a living trust estate has really impressed me over the years --- the 10% in probate fees and 13 months delay versus no trustee fee (commonly) and less than a month to distribute the estate. The property that is in the trust prior to your death should escape the expenses incident to court administration (probate). What I have been trying to say is that a Living Trust can avoid probate at your death, and your spouse’s death, and save unnecessary expenses of approximately 5-10% of the gross inheritance.
- Another advantage of this type of trust is that you can watch the trust in actual operation during your lifetime, and thereby decide whether or not a particular trustee selected by you will be suitable for your particular estate and your specific wishes. Your trustee (who succeeds you), under your living trust, is given adequate powers so that the interests and security of your loved ones (your trust beneficiaries) will be protected and carried out exactly according to your wishes. At the same time, the trust will function smoothly without additional expenses or delays. It is, therefore, important to choose a qualified and suitable trustee. I have authored a book that explains in greater detail this selection process. In order to emphasize the operation and the advantages of the living trust, look at the following advantages below:
With a Living Trust:
(1) You avoid probate on assets transferred into it.
(2) Your trust is amendable and revocable during your lifetime.
(3) You can add or withdraw assets from the trust.
(4) You can monitor the operation of the trust during your lifetime.
(5) You have the peace of mind knowing that the trust is confidential.
(6) Your trust avoids the conflicts that often accompany will and the resultant probate.
(7) Your cost in setting up your Revocable Living Trust is
small, when compared to the potentially high cost of probate.
(8) Your assets held in a Living Trust are available to the trust beneficiaries immediately after your death.
(9) Your trust helps avoid ancillary probate (probate of any assets you may have in other states).
(10) You can provide, or do, most anything you want --- as
long as your trust wishes, or provisions, do not break any laws.
By Clyde Dee Sandgren
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