• It is important to know that many assets are not subject to probate even if they are not owned by a trust. Excluded assets are:
a. Property held as joint tenants with rights of survivorship passes by operation of law and is not subject to probate if one of the owners dies.
b. Proceeds of IRA accounts, pension plans and life insurance policies that have named beneficiaries are paid directly to the designated individual(s) without probate.
• A revocable trust provides for the orderly management of a grantor’s financial affairs, while retaining control.
• If a trustee become incapacitated, the trust will provide for a succession of the trustee position without the requirement of a court proceeding, e.g. guardianship or conservatorship. A guardianship may still be needed if there are assets outside the trust or for non-financial issues that may exist.
• Owners of trust need to develop thorough trustee instructions. This is a major advantage of revocable trusts- to provide specific rules to the successor trustee about post-disability events.
• Authority under a power of attorney will terminate at the death of the principal while the revocable trust agreement will continue after the death of the grantor at least through the final trust distributions and possibly with continuing trusts. If the bank account is in the name of the trust the house bills can continue to be paid and monetary assets can be added to prepare for final distribution after all the estate affairs are completed -eg. Payment of taxes and creditors.
• A “pour-over will” is necessary for assets not transferred into the trust. This will should contain back-provisions in case the trust is revoked and not replaced.
• Does my trust end when I die?
Unlike a will, a trust doesn’t have to die with you. Assets can stay in your trust, managed by the trustee you selected, until your beneficiaries reach the age(s) you want them to inherit. Your trust can continue longer to provide for a loved one with special needs, or to protect the assets from beneficiaries’ creditors, spouses and future death taxes.
Summary of Living Trust Benefits
• Avoids probate at death, including multiple probates if you own property in other states
• Prevents court control of assets at incapacity
• Brings all of your assets together under one plan
• Provides maximum privacy
• Quicker distribution of assets to beneficiaries
• Assets can remain in trust until you want beneficiaries to inherit
• Can reduce or eliminate estate taxes
• Can be changed or cancelled at any time
• Difficult to contest
• Prevents court control of minors’ inheritances
• Can protect dependents with special needs
• Prevents unintentional disinheriting and other problems of joint ownership
• Professional management with corporate trustee
• Avoid circumstances where a will probate would require notifying distant relatives or difficult-to-find distributees (persons who must be served in probate)
• A trust can let you provide for your spouse without disinheriting your children, which can be important in second marriages. It can protect inheritances for children and grandchildren from the courts, creditors, spouses, divorce proceedings, and irresponsible spending.
• Lasts after death-no interruption
• Protection for vulnerable person-write check excessively
• Ease with financial institutions- banks want special powers of attorney
• Trustee has more clear and specific duties than the Power of Attorney
• You can require accountings from trustee
Knowing you have a properly prepared plan in place – one that contains your instructions and will protect your family and will give you and your family peace of mind. This is one of the most thoughtful and considerate things you can do for yourself and for those you love.
Joint revocable trusts allow married persons to combine their assets and control the disposition of those assets in a uniform manner. A portion of the trust becomes irrevocable upon the death of the first spouse, unless otherwise provided by the trust. The trust is always revocable upon the death of the surviving spouse.