A living trust is a significant part of an estate plan. A revocable living trust is a partial substitute for a will. You can put your assets into the trust, and they are managed for your use during your lifetime. The remaining assets are transferred to your beneficiaries upon your death. Generally, most people will name themselves as trustee (person in charge of managing the trust), so they can remain in control of their own assets for their lifetime. It is advisable to name a replacement trustee, in the event of your incapacitation or death. A revocable living trust can be revoked or amended at any time by the settlor (the person who created the trust).
A revocable living trust should:
- Provide the trustee with the right to control the assets within the trust;
- Declare that the trustee manage the trust’s assets during the lifetime of the settlor;
- The trustee has a fiduciary duty to act in the best interests of the settlor; and
- Identify future beneficiaries that will receive the assets of the trust upon the death of the original trustee.
Who needs a Revocable Living Trust?
A revocable living trust is not for everyone. Those with simple estate plans and who do not have significant assets may not need a living trust. A living trust is important for those with significant assets. Having a revocable living trust can make the management and distribution of your estate much less complicated should you suddenly become incapacitated or upon your death. Your chosen successor trustee would then be able to manage the assets for you. However, if you did not have a living trust and did not appoint someone to manage your assets should you become incapacitated, the court would have to determine who could manage your assets instead. Having a revocable living trust with pre-made arrangements can save your heirs time and expense, as no court proceeding would be necessary.
As previously stated, one of the main advantages to a revocable living trust is that it is probate free. A revocable living trust is revocable and changeable for the lifetime of the settlor. This type of trust minimizes or eliminates challenges to the will. In California, the settlor is allowed to add a provision providing for disinheritance to those who dispute the specified distribution of the estate.
Because living trusts are not supervised by the court, one of the main potential advantages can also become a disadvantage in the event that you appoint the wrong trustee. The risk that a trustee would be able to not act in your best interest is greater than when an executor is directly supervised by the court. Creation of a living trust can also be expensive and potentially higher than the cost of preparing a will, though this varies on a case by case basis. Another potential disadvantage to a living trust is that lenders may not be willing to lend to a trust in order to purchase real property. This can cause additional administrative headache and paperwork.
Contact an Experienced Attorney
It is vital to ensure that your assets are protected in the event of your incapacitation or death. Creation of an estate plan, including a revocable living trust, can be a complex and overwhelming legal endeavor. The knowledgeable attorneys at the Leslie Legal Group are here to help guide you through this process and create an estate plan that is right for you. We will ensure that you understand every step in the estate planning process. Contact us today for a consultation.