Many AARP and other senior members are choosing a living trust over a will. However, the price of a living trust can be a bit steep. A “will” is the traditional means to pass on any belongings or estate to their heirs. However, it is not the only means available to you.
There are various estate planning tools available in the market, and the revocable living trust is one of the most popular ones amongst the consumers. If you are an AARP member or a senior looking for a medium to avoid your will to go through probate for validation, a living trust is the best solution, offering before and after-death advantages.
Do-it-yourself Revocable Living Trust
Living trust: An Overview
The feasibility of revocable living trust for you depends on a variety of factors. Therefore, you must always consult a personal financial advisor and a qualified attorney for your estate planning related affairs.
Before we get into that, let us find out what a living trust is and how a revocable living trust can help you streamline your affairs.
What is a Living trust?
It is a legal trust or document created during your lifetime where the trustee (a designated person) gets the responsibility to manage your assets for the gains of an eventual beneficiary.
The primary purpose of a living trust is to enable easy transfer of your trust and assets to the beneficiary while bypassing expensive and complicated legal proceedings of probate. A living trust agreement allows you to designate a trustee to hold legal possession of property and assets that flow into your trust.
How Living trust Works?
A designated trustee manages a living trust. It is a trustee’s fiduciary duty to prudently manage the trust in the best interest of the beneficiary or beneficiaries nominated by the trust creator, also known as the grantor.
Upon the demise of the grantor, the assets go to the designated beneficiaries according to the trust agreement. The living trust is a bit different than a traditional will. Unlike a will, a living trust stays in effect even when the grantor is alive and does not have to go through the legal proceedings and get an authentication stamp from the courts before going to its nominated beneficiaries after the grantor dies.
What Is a Revocable Living trust?
A revocable living trust is everything in the spirit that we explained above. However, by “revocable,” it means that as long as you are a mentally competent grantor, you can always review, change, and dissolve the living trust at any time. It depends on your discretion for whatever reason you may have. However, it becomes irrevocable once you die.
A revocable living trust involves three parties, a grantor (that will be you), a trustee, or trustees who are willing to manage your property and assets according to the terms and conditions of the trust and the beneficiaries.
You can name both yourself and your spouse as the trustees, in case you want to keep full control of the assets and properties while you are alive. Being a trustee, you will have the legal power to deal with your assets as you like, such as sell them, invest them, exchange them, or do whatever you wish to do with them.
Difference between a Will and a Living trust
Both living trust and a will are a document with inheritance instructions by you, such as who gets what, how, and when they get it, etc.
If you are an AARP member or a senior who prefers privacy and wants to avoid probate, then living trust is ideal for you. A living trust is not a part of public records unless a beneficiary or a trustee demands court approval of the proceedings. However, probate records are always available to the general public.
Living trusts are suitable under some circumstances. However, most people with modest assets and properties prefer wills as an adequate solution. Wills are comparatively cheaper and less complicated than living trusts.
Related Article: Will vs Living Trusts
What if You Do Not Have Either?
In case you do not leave any proper inheritance instructions about your property and assets, it all goes to your spouse or closest heirs. This way, your estate may go to someone you did not want to be a beneficiary.
Additionally, a state may assign a trustee who you would not trust to manage your affairs of distribution of your property or become the legal guardian of any minor children.
What a Revocable Living trust Can and Cannot Do for You?
A living trust provides you the assurance that your assets and your heirs’ interests will be under protection in case you get to a state where you are unable to handle your financial affairs. It rectifies the need for your assets and property to pass through the legal process before transferring to your beneficiaries.
If you use proper terms and conditions, your living trust can actually act as a substitute document for a power of attorney. You can even have your trust written is a fashion where all your assets will pass on to the beneficiaries immediately upon your demise.
You can also designate your assets in portions to each beneficiary over time. You can even specify the amount they get in each installment. Get help from LawDepot, we can include tax savings clauses to help reduce federal and state-level estate taxes.
Now, what your living trust can not provide is protection against a displeased heir. A living trust can help resolve the most common and typical family conflicts in the inheritance arena. However, if you have cut someone off, or did not give the share they believe they deserved, they will have the right to challenge your living trust in court just like a will.
Who are the Trustees?
You can assign anyone as a trustee as far as they are an adult and mentally competent. Typically, you will name yourself and your spouse as trustees, to keep full control over your estate and assets. However, in case you become disabled or too ill to manage your affairs, your successor trustee or co-trustee will handle the matters on your behalf while you are alive or in case of your demise.
You can name your children as successor trustees. However, if you are in doubt that your children may not be able to distribute the assets as per your instructions, you can always assign a professional fiduciary to be your successor trustee. It could be a professional trust company or an experienced legal firm with expertise in living trusts.
Do You Have to put a lot of Money in the Living trust?
Except for a little token dollar amount, you do not have to put any funds into your living trust at the time of its creation. However, you can put anything from a dollar to all your assets in a living trust. You can also specify a clause in your living trust that your trust be funded only upon your death. There are advantages to every available option depending on your concerns and needs.
Will a Living trust need a lot of Additional Costs and Work if You Add or Delete Investments and Properties?
The answer is “NO” – you do not need to consult a lawyer in case of any changes to your assets.
Do You Need an Attorney to Prepare Your Living trust?
“YES” – I can tell you some horror stories which caused a lot of trouble due to a poorly drafted living trust. Therefore, avoid being your own lawyer and get help from a professional legal firm such as Law Depot, who are experts in the living trust-related affairs.
Beware of the online or generic living trust templates claiming to be customizable legal documents by the attorney; they are not!
How much does a Living trust Set up Cost?
The price depends on your circumstances and the attorney you use. Other price-deciding factors include the size of your assets, your geographical location, and the complexity of your case. The living trust set up may cost you from a few hundred dollars to several thousand.
So is revocable Living trust Right for You?
According to the experts, a revocable living trust is not ideal for everyone. You will have to weigh your pros and cons. If you have a modest estate and assets, then a living trust may not be worthwhile because of the setup and creating costs, which are exponentially more than a will.
However, you can always consult with a qualified living trust adviser to help you make the right decision.
To get you started, here are five free and cheap will and trust makers available online.
• Quicken WillMaker Plus
Get Experts Help
If you are a senior citizen or an AARP member, now you are aware of what a living trust is and what it entails. However, you must always choose a professional attorney firm with expertise in living trusts.