The Mount Clemens living trust lawyers at our firm place an emphasis on education, because far too many people have misconceptions about asset transfer vehicles. One of the most common ones is the idea that trusts are only for very wealthy people. There would be truth in this statement, but the word “only” makes it patently false.
Yes, very high net worth individuals can benefit from the utilization of certain types of trusts. These are going to be irrevocable trusts that are used for estate tax efficiency and asset protection. However, the revocable living trust is an asset transfer vehicle that is the right choice for a wide range of different people that do not consider themselves to be among the financial elite. Let’s look at a handful of the benefits that living trusts provide.
You’re the Boss
A lot of people are under the assumption that you surrender all personal control of assets that you convey into a trust, but this is not the case when it comes to a living trust. The trustee is the person that that administers a trust, and you can act as the trustee while you are alive and fully capable of making sound decisions. Plus, you can act as the beneficiary and utilize assets in the trust as you see fit.
When you establish the trust agreement, you name a successor trustee to handle these chores after you are gone. You can name someone that you know, or you can use a professional fiduciary such as a trust company or the trust department of a bank.
You also name a successor beneficiary to receive distributions from the trust after your passing. If you choose to do so, you can name multiple beneficiaries.
Your control is absolute, because you are not forever beholden to the original terms that you set forth when you established the trust declaration. You can change the beneficiaries, and you can name a different trustee. Plus, you can convey additional property into the trust at any time.
In fact, you can dissolve the trust entirely if you ever want to because after all, it is a revocable living trust.
As we touched upon above, you can use a professional to act as the trustee after you pass away. Many people will go this route for a number of different reasons. For one, there would be no succession concerns, because the bank or trust company will always be there. Secondly, there is going to be industry-standard oversight with regard to the way the trust is administered.
Another benefit is the fact that a professional will know how to invest income producing assets wisely. Lastly, you can rely on the fiduciary to show no favoritism and follow your instructions to the letter without emotion.
You do not have to instruct the trustee to distribute everything in the trust right after your passing. For example, you could allow for set monthly distributions to the beneficiaries, or you could direct the trustee to distribute only the earnings without going into the principal at all. Some people will allow for larger, lump sum distributions when the beneficiaries reach certain age thresholds.
Of course, you could give the trustee latitude with regard to emergency distributions. The exact details are up to you, and this is another great benefit that you gain if you utilize a revocable living trust as your primary asset transfer vehicle.
Alzheimer’s disease strikes approximately four out of every 10 people that are 85 years of age or older. Of course, some people become unable to make sound decisions for other reasons, and incapacity can strike at a younger age. To account for this, you could empower the successor trustee, or a different individual or entity, to act as the trust administrator in the event of your incapacitation.
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If you would like to learn more about living trusts and other estate planning matters, download our free estate planning worksheet right now. And of course, you can send us a message through this website or call us at 586-493-7661 and one of our Mount Clemens living trust lawyers would be glad to answer any questions that you may have.