Using a living trust is ideal under certain circumstances.
When it comes to estate planning, you should thoroughly consider your options.
First, you will want to select an experienced estate planning attorney to create your plan.
Such an estate planning attorney will create a plan to best meet your unique needs.
According to a recent KYT24 article titled “Fundamentals Of A Living Trust,” most people need to decided between a will-based plan or revocable living trust-based plan.
Both of these options allow people to provide for their families and protect them in the event of incapacity or death.
With a last will and testament, assets will be distributed to your heirs through the probate process.
With a revocable living trust (RLT), you can pass assets to your heirs without the cost and time of probate.
In other words, after the death of the last surviving spouse, the assets will be inherited immediately by your beneficiaries.
Do not attempt to create a RLT on your own.
Your estate planning attorney will be able to prepare your RLT to meet your specific needs and goals.
If a RLT is not properly drafted, you could set your family up for challenges when you die.
After the living trust has been created and signed, you will need to fund the RLT.
How do you “fund” it?
You will need to retitle the assets you want held in the trust to place them under the name of the trust rather than under your own name.
This includes your personal residence, brokerage accounts, and the like.
Assets that pass via beneficiary designations (think life insurance) should have your RLT as the beneficiary.
[Note: before designating your RLT as the beneficiary of any retirement plans or annuities, be sure to discuss your option with your attorney.]
Failing to take these essential steps now means the RLT will have no authority for the management and distribution of such assets later.
In short, your RLT would be worthless, or at it would not function as designed.
Before choosing between a will-based estate plan and a RLT-based estate plan, review your family situation and outline your goals with an experienced estate planning attorney.
Reference: KYT24 (Nov. 14, 2020) “Fundamentals Of A Living Trust”