Estate Planning News
The revocable living trust
With a revocable living trust, you transfer ownership of assets of your choice to a trust while you are alive. The trustee administers the trust according to its terms. You can keep any or all of the income from the trust, act as trustee, change the provisions, or even terminate the trust. However, once you die, a successor trustee will take over and the trust then becomes irrevocable and cannot be changed.
There are many potential benefits to a living trust, including—
- Trust assets will be distributed to your heirs without the necessity of probate, which typically means that heirs will receive their inheritance quickly.
- The successor trustee you name can take over the trust management if you become mentally or physically disabled. This can avoid the court appointment of a guardian.
- Upon your death the successor can immediately take over management of trust assets that may require immediate attention.
- In the event you own property in a state other than New York, the trust can bypass the multiple state probate process.
Living trusts also have potential disadvantages, including—
- Depending on the assets you own, you may not need a living trust to avoid probate. Insurance proceeds, retirement accounts, and jointly owned property automatically pass to your beneficiary.
- Once you set up a trust, it must be funded by retitling assets in the trust's name. This can be time-consuming and require a significant amount of paperwork.
- Creditors have a limited time after your death to make claims against your estate in probate. There is no comparable time limit for living trusts.
If you choose to create a living trust, you still want a pour-over will that covers the disposition of any assets left out of the trust. If you have minor children, you also need a will to name a guardian for them.
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