Using Revocable Living Trusts in Estate Planning

Estate Planning is the process of planning for the disposition of assets at an individual’s passing. Estate planning is important because the documents executed pursuant to an estate plan explain an individual’s intent as to how and when they desire their assets to be distributed to their family, friends and other loved ones. Estate planning also allows an individual to plan for an event of incapacity, such as dementia or other related medical condition. With regard to incapacity planning, an individual can appoint certain power holders to make decisions, on their behalf,(in the event they cannot do so themselves.

Estate planning commonly involves the drafting and utilization of revocable living trust agreements (the “trust”). This is especially the case where an individual or a marital couple has significant assets, which are at risk of entering probate. As a general rule, any assets that are individually titled may enter probate. This includes: bank accounts, brokerage accounts, stocks, bonds, businesses as well as other many other assets. Further, each asset has to be accounted for separately to ensure that the asset does not enter probate.

A revocable living trust is an agreement between a grantor (also known as the settlor), and certain trustees for the benefit of beneficiaries. The grantor/settlor is the creator of the trust. Essentially, the revocable living trust can serve one of two purposes (or both in some circumstances). First, assets can become “funded” into the revocable living trust in order to avoid probate. Second, assets can become “funded” into a revocable living trust to promote the longevity of the “Trust Fund.” The revocable living trust also promotes support for the spouse and the family unit after an individual passes (since the document survives the death of the settlor/grantor). The revocable living trust can also take advantage of the marital and/or charitable deductions when distribution of assets occurs. Of course, this all depends on the specific drafting of the trust agreement. That is the reason why it is extremely important to employ a knowledgeable estate planning attorney to draft estate planning documents.

For more information on the revocable living trust or for more information on Asset protection, Estate planning, Business Law and/or Probate please contact the attorneys of The Presser Law Firm, P.A.