Revocable Living Trust
The Revocable Living Trust (“Living Trust”) is the cornerstone of the modern estate plan. Properly drafted, a Living Trust offers complete asset control to clients during their lifetime; provides for them and their loved ones in the event of their incapacity; and on death, allows them to pass their assets to their loved ones without the costs, delays, and publicity associated with probate.
In order to understand the benefits of a Living Trust, we must contrast it with a Will. A Will is a testamentary instrument. In other words, a Will takes effect only upon your death. A Living Trust, on the other hand, takes effect as soon as it is signed and assets are transferred to it. Both a Will and a Living Trust set forth your directions for the distribution of your assets upon your death. But unlike a Will, a Living Trust also directs the management of your assets during life. Consequently, if you have a properly funded Living Trust, your “successor trustee” can simply continue to manage the assets in your trust without court intervention or supervision.
The Trust Agreement tells how and who is to determine that you are incompetent and gives directions for the management of financial affairs, which the successor trustee must follow. Please notice that the successor trustee deals only with finances. A successor trustee does not have the power to make your health care decisions. However, even with a revocable living trust, you still need a Will; specifically, you will need a Pour-Over Will says that anything you own at death passes to the Trust. This will take care of any assets that may not have been titled to the Trust.
Simply put, by transferring your assets to your Living Trust, you maintain control of the assets during your life but have removed those assets from the probate process after your death. All of your assets will simply pass according to the instructions you left in your Living Trust and, although an administration process is still necessary, it does not involve the time, expense, and publicity of probate court intervention.
A Revocable Living Trust also provides flexibility, enabling you to control how and when your assets will be distributed to loved ones or charity after your death. You may also avoid a possible second estate tax when your child dies and the assets pass to your grandchildren. And you can provide as much latitude to your children as you like; at Vaksman Khalfin we specialize in drafting the terms of the trust in accordance with your wishes.