By Libby Banks, The Law Office of Libby Banks, PLLC
The Revocable Living Trust is the foundation for most estate plans prepared in my office. The trust reduces expenses and provides for a smoother administration of your estate. It not only avoids the time and expense of a probate action at your death, but it also avoids court proceedings if you are incapacitated.
I like to think of your Trust as your treasure chest. The assets you worked and saved to accumulate go into your Trust. While you are alive and able, you are taking care of the treasure chest as the trustee, and you are the only beneficiary of the assets. If you can’t take care of your treasures (manage your finances), either because of your death or because you are incapacitated, you have named a successor trustee to step in to take over managing the assets.
How do we put things in the Trust? We title your home, bank account, brokerage account and other assets in your name as trustee rather than in your individual name as owner.
For instance, for the home of a husband and wife (we’ll call them John and Ann Smith), we prepare, sign, and record a deed to the house. In the deed John Smith and Ann Smith, husband and wife, convey their house to John Smith and Ann Smith, Trustees of the John and Ann Smith Trust. The same thing happens with your financial accounts.
Once your Trust is in place, you continue as always to be the manager of your financial affairs. You manage your assets, receive the income, write checks, make deposits, pay bills, and buy and sell property. You have full control.
But if you can no longer manage your financial affairs, either because of death or incapacity, your Trust contains the instructions for who is in charge – the designation of your successor trustee. The Trust tells the successor trustee how they are to manage the trust assets and distribute money for your benefit if you are incapacitated. The Trust also contains your instructions for administering your assets and distributing them to your beneficiaries at death.
My clients notice very little difference in how they handle their finances once they have the Trust in place and their assets titled in their names as trustees. However, when a client has become incapacitated or passed away, their designated successor trustee certainly notices the difference. The trust results in a much easier transition for them to take care of financial affairs for the incapacitated person, and to manage and distribute the assets after death.
If you have questions about whether a trust is right for you, I offer a free initial consultation to discuss your specific situation and what would work best for you. To book your appointment, call my office at 602-375-6752. Visit our website for more information on trusts and other estate planning at libbybanks.com.