People sometimes shy away from trusts because they do not understand all of the facts. They want to retain control of their assets, but they are under the impression that they will be surrendering control if they convey assets into any type of trust.
In fact, this is not the case with revocable living trusts.
There are irrevocable trusts that are used for asset protection, estate tax efficiency, and other purposes. You do lose direct control of assets placed into this type of trust, but you retain control when you create a revocable living trust.
Let’s look at these trusts a bit closer, with an emphasis on the role of the successor trustee.
The anatomy of a revocable living trust starts with the grantor of the trust. This is the person who actually funds and creates the revocable living trust.
The trustee is the individual or entity who administers the trust. The trustee handles the funds, makes investments, and otherwise manages the trust.
If you create a revocable living trust, you can act as the trustee while you are alive and well. As the trustee you continue to manage the assets that you conveyed into the revocable living trust. You do not surrender control to an outside trustee.
The beneficiary of the trust can receive monetary distributions from the trust. As the grantor of the trust, you can also act as the beneficiary throughout your life. You can receive distributions from the trust as you see fit without limitations.
The eventual objective is to facilitate asset transfers after you pass away. To make this happen, you name a successor trustee, and you name successor beneficiaries.
When you are choosing the successor trustee, you have options. You can name someone you know to act in this role, but there are drawbacks that go along with this course of action. Do you know anyone who is qualified to manage the trust? What about age, will the successor trustee outlive you? Are there any conflicts of interest?
Many people will utilize a trust company or the trust section of a bank, so that they can be certain that the trust is professionally administered without any snags.
After you pass away, the successor trustee will follow the instructions that you leave behind in the trust agreement. The trustee will distribute assets to the beneficiaries in accordance with your wishes. These distributions will take place in a timely and efficient manner outside of probate.
Probate is a legal process that can be time-consuming and expensive.
Schedule a Free Estate Planning Consultation
If you have questions about revocable living trusts, we can help. We offer free consultations, and you can send us a message through this link to request an appointment: Grand Forks ND Estate Planning Attorneys.