This is an article from The Potter Law Firm (http://www.potterestateplanning.com/) in Charlotte, North Carolina, that we thought others may find helpful.
There are choices to make when you are devising your estate plan. There are a number of different asset transfer vehicles you can use and you should understand them fully so that you can provide for each of your loved ones in the optimal manner.
A trust can be a good choice for a wide range of families. There are those who assume that trusts are only useful for the extremely wealthy, but this is really not true.
There are multiple different types of trusts that are used in the field of estate planning. When it comes to the wealthy, the estate tax can be a factor. If you are transferring more than $5.45 million (this is the amount of the federal estate tax exclusion in 2016), the portion that exceeds this amount could be subject to the estate tax.
Certain types of trusts can be used to obtain estate tax savings and this is one of the reasons why people often think that trusts are only useful for the wealthy.
Revocable Living Trusts
Many trusts that are utilized by wealthy families to gain estate tax savings are irrevocable trusts, because you surrender incidents of ownership when you establish this type of trust. There are also revocable living trusts and these devices can be useful for people of relatively ordinary means.
If you were to establish a revocable living trust, you would be called the grantor or settlor. You could act as the trustee and the beneficiary while you are alive and of sound mind, so you would handle the administration of the trust directly. This can be comforting if you do not want to lose control of the assets while you are alive.
You are free to take distributions of cash or other assets, you can make changes to the trust agreement and you can even revoke the trust entirely.
When would a revocable living trust terminate or expire? For the most part, this is up to you. When you create the trust agreement, you are the decision-maker.
After you pass away, the trustee would follow instructions that you include in the agreement. You could instruct the trustee to distribute all of the assets in the trust to the beneficiaries immediately after your passing. Once there was nothing left in the trust, it would no longer exist.
It is also possible to protect a spendthrift by instructing the trustee to distribute limited assets over an extended period of time. Under these circumstances, the trust would no longer exist once the assets were exhausted.