How to Plan with a Living Trust
A Living Trust is one of the most misunderstood parts of estate planning, especially since many people associate trusts with the extremely wealthy and the term “trust funds.” But Estate Planning attorneys will tell you that Living Trusts can be created by just about anyone looking to make an estate plan. They can provide a number of significant advantages when it comes to avoiding probate and they provide more in-depth planning techniques for incapacity and legacy planning for your loved ones.
The only types of assets that must go through a prolonged probate process are solely-held assets—this means anything that is owned by one individual without any beneficiaries. When a Living Trust is created, the trust maker (Grantor) transfers their assets into the trust, which is then controlled by a Trustee. In almost every case, the Grantor also serves as the Trustee, meaning the only thing that really changes with their assets is how they’re titled. When that person passes away, their assets do not have to go through the probate process because those assets are owned by the trust. Avoiding probate saves your loved ones the hassle and cost of a long probate process and affords privacy for your final affairs. An estate planning and trust attorney can help assess your situation and advise you on whether or not a Living Trust would be best for you based on your goals.
As noted above, the Grantor typically serves as the Trustee of their own Living Trust. However, Successor Trustees are named to take over the Trust in the event of the original Trustee’s death, incapacitation, or if they decide at some point that they would just rather have someone else handle their financial affairs. A Successor Trustee would then have control over all the assets held in the Living Trust and could make decisions on the Grantor’s behalf. This situation could also help avoid a guardianship/conservatorship proceeding, in which a person is appointed by the court to handle the incapacitated person’s financial affairs and make healthcare decision for them.
However, if the Grantor has any solely-owned property outside of the Living Trust, then a Power of Attorney may be needed to handle financial matters while the Grantor is still alive but incapacitated, or a probate must be opened in the event of the Grantor’s death. This is why the “funding” of the trust is critical. You can speak with an estate planning and trust attorney if you have any questions about how a Successor Trustee can work with your Living Trust.
If you would like to learn more about planning to avoid probate or provide your loved ones the legacy planning protections with a Living Trust, or if you’d like to discuss your current estate plan and Living Trust, please contact us to set up an appointment at one of our offices throughout Williamsburg, the Peninsula, and Southside in Virginia by calling 757 645-3176 or 866-603-5976.