Revocable Living Trusts: Improving Quality of Life Through Peace of Mind
Summary: While there are many advantages to a revocable living trust, one of the primary benefits is the ease of transition between the original trustee and the successor trustee.
A trust is an estate planning tool that allows a person or organization known as a trustee to hold and manage assets for a designated beneficiary. While there are many different types of trusts, a revocable living trust is popular and common because of its flexibility and benefits. Essentially, with a revocable living trust, a person puts all of their assets into the trust during their own lifetime – then, they maintain complete control over those assets until a successor trustee takes over. The simple transition from the original trustee to the successor trustee, during or after the original trustee’s lifetime, is one of the major benefits of the living revocable trust.
How Does A Revocable Living Trust Work?
A person creates a revocable living trust while they are alive, re-titling certain assets and appointing themselves both the trustee and the beneficiary of the trust. This gives them the authority to manage any assets covered under the trust (ex: real estate, stocks, bonds, cash, etc.) and keep control of those assets. While the person who created the trust is alive, he or she can distribute those assets to themselves and reap any benefits as they see fit. Additionally, this trust is known as a revocable living trust because the trustee/beneficiary can change the terms or even cancel the trust at any time.
Once the original trustee/beneficiary dies or is incapacitated and unable to keep managing the trust, the named successor trustee takes over and will be responsible for managing trust assets. The successor trustee will disburse the assets as per the original trustee’s instructions. They also have a fiduciary duty, meaning the successor trustee is required by law to act honestly and prudently in managing the trust and its assets.
The Benefits of Having a Successor Trustee – Easy Transition of Control
While there are many advantages to forming a revocable living trust – such as privacy and the possibility of avoiding probate – one of the primary benefits is the ease of transition between the original trustee and the successor trustee. If the original trustee/beneficiary, for whatever reason becomes mentally or physically incapacitated, the named successor can quickly and easily take over the trust and begin managing the financial affairs. The successor will have many, but not all, of the same rights and abilities as the original trustee, whether that be managing the assets, adjusting any accounts as needed, or even taking distributions from the assets for the benefit of the original trustee/beneficiary. The successor can use the trust assets for the original trustee’s health care, financial support, or simply maintaining their general welfare during this period of incapacity. The original trustee/beneficiary gets to set the rules for what distributions should be made and the successor trustee has to follow those rules.
Distributing the Trust Assets to Beneficiaries
If the original trustee/beneficiary passes away, the successor trustee is responsible for permanently taking over the trust and distributing any assets remaining in the trust. He or she has a fiduciary responsibility to distribute the assets to the beneficiaries named in the trust, and make those distributions according to the original trustee’s instructions. The distribution process is typically a straightforward one. Unlike a Financial Power of Attorney, a revocable living trust will be recognized in all 50 U.S. states, and typically, banks and brokerages will not challenge the validity of this trust.
Want To Learn More? Contact Siedentopf Law
If you have more questions about revocable living trusts or would like help creating a trust, please reach out to Siedentopf Law. We are an experienced estate planning and probate firm and are passionate about helping clients navigate complex issues in an easy and stress-free manner. You can reach Siedentopf Law at (404) 736-6066 or schedule a consultation using our online form.
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