There is a legal device called a revocable living trust that is a very effective estate planning tool if certain circumstances exist.
This type of trust will not provide asset protection or estate tax efficiency, but most people are not exposed to the estate tax, and many people are not concerned about litigation.
A revocable living trust can be a good choice if you want to facilitate efficient asset transfers outside of probate. If you use a will instead of a trust, the will must be admitted to probate. During probate there is a proving of the will, and the probate court examines the will to determine its validity.
There is nothing inherently wrong with probate, but it creates an obstacle for the heirs to the estate, because inheritances are not distributed until after the estate has been probated. It can be a time-consuming process, taking close to a year in uncomplicated cases.
When assets have been conveyed into a revocable living trust, the trustee can distribute these assets outside of the probate process, so the asset transfers will typically take place in a much more timely manner.
In addition to the probate avoidance advantage, when you have a living trust, you can leave behind instructions that the trustee must follow. You don’t have to allow for lump sum distributions. It would be possible to have the trustee distribute the earnings of the trust on an incremental basis, and you could make the principal available for certain purposes at the discretion of the trustee.
Joint Living Trusts
It is possible for a married couple to create a joint living trust. This could be a logical choice if most of the valuable property that is in play is jointly owned property.
Exactly what would happen after the death of one spouse depends on the terms that were included in the trust declaration. Typically, both partners would serve as co-trustees. The trust declaration could allow the surviving partner to continue on as co-trustee with no other trustee succeeding the deceased partner.
The surviving partner could have sole control over the property that has been conveyed into the revocable living trust, but this is not the only way that the trust can be constructed.
Property that was solely owned by the deceased partner could be distributed among chosen beneficiaries after the death of one partner. Technically, the portion of jointly owned property that was owned by the deceased partner could also be distributed to any beneficiary or beneficiaries.
Living Trust Report
If you would like to obtain more detailed information about living trusts, download our special report. The report is free, and you can access your copy through this page: Grand Forks ND Living Trusts.
- When a Parent Needs Medical Treatment and the Adult Children Cannot Agree, What Happens? - February 25, 2021
- The Best Way to Leave Your Estate to Your Spouse - February 23, 2021
- Protecting Your Wishes in Your Will - February 11, 2021
