A living trust is among the most common additions to a comprehensive estate plan. Only your estate planning attorney can help you decide if a living trust would be a beneficial addition to your estate plan; however, it helps to know how a living trust might benefit your overall plan. Toward that end, the Fayetteville estate planning attorneys at Wilcox Attorneys, PA explain the top five reasons to incorporate a living trust into your estate plan.
Incapacity planning. A revocable living trust is a commonly used incapacity planning tool. As the Settlor of the trust, you name yourself as the Trustee and name someone you wish to take over control of your assets in the event of your incapacity as the Successor Trustee. Major assets are then transferred into the trust. Because it is a revocable trust, assets can easily be transferred in and out as needed. As the Trustee, you control those assets while you can do so; however, if you become incapacitated, control over the trust assets automatically shifts to the Successor Trustee without the need for court intervention.
Probate avoidance. Assets held in a trust are non-probate assets. One popular strategy that can significantly decrease your estate’s exposure to probate is to create a revocable living trust and transfer most of your assets into the trust. By naming yourself as the Trustee, you continue to control all the trust assets while you are alive; however, upon your death, those assets are handled outside of the probate process. You can use the trust terms that you create to determine what happens to the trust assets after your death.
Protecting assets designated for minor children. A trust can provide several benefits to the parents of minor children. As the Settlor of the trust, you appoint the Trustee, and any successor Trustees, allowing you to decide who will protect and manage the inheritance you leave your children. In addition, a trust lets you stagger the inheritance you leave your children instead of giving them a lump sum and lets you decide when they receive those distributions. Handing an 18-year-old a large lump sum inheritance is rarely a wise idea. A trust allows you to stagger the distributions over several years.
Special needs planning. Eligibility for most government assistance programs, such as SSI and Medicaid, is dependent on the participant’s income and assets. Consequently, you must be careful about gifting assets directly to a beneficiary with special needs, both while you are alive and upon your death. A Special Needs Trust, also referred to as a “supplemental” needs trust, is a specialized trust that can help you gift to a beneficiary with special needs. It allows you (and other family members) to designate assets to be used to supplement the care provided by other programs, such as Medicaid and SSI, without those assets counting against the beneficiary when determining eligibility for assistance. It also allows you to appoint a Trustee to manage and protect those assets after you are gone.
Contact a Fayetteville Estate Planning Attorney
For additional information, please sign up for one of our FREE estate planning webinars. If you have additional questions or concerns about incorporating a living trust into your estate plan, contact an experienced Fayetteville estate planning attorney at Wilcox Attorneys, PA by calling 479-443-0062 to schedule your appointment today.