Many people who are not especially informed with regard to their options assume that a last will is the right choice as an estate plan centerpiece. They are under the impression that all trusts are only useful for very wealthy people who have extremely complex estate planning concerns. In fact, this is not the case at all.
There is another solution that is actually far more effective for a wide range of people. This legal device is the living trust, and we will take a look at the benefits in this blog post.
An executor cannot quickly and efficiently distribute assets to the inheritors after the death of the testator when a last will is used; the estate administration process is considerably more complex. The executor would be required to admit the will to probate, and the court would provide supervision.
This process serves a logical purpose. To explain by way of example, let’s say that you lend a friend $100,000 to inject into his business, and he passes away before he has paid the debt. It would not be fair for the assets that comprise his estate to be distributed to the heirs until he has paid you back.
During the probate process, the executor is required to notify creditors, and they are given a certain amount of time to come forward seeking satisfaction. As we have stated, it is only fair, but it is one factor that slows down the probate process.
Assets cannot be distributed to the heirs until the estate has been probated and closed by the court. A case that is not particularly complicated will typically take about eight months to a year to run its course.
Another thing about probate that can be described as negative is the loss of privacy. Over the years, you may have read about the way that celebrities distributed their assets after they passed away.
Have you ever wondered why that information was available? The reason why is because probate is a public proceeding, and anyone that has an interest can access probate records to find out what transpired during the process.
The final pitfall that we will look at here is the cost factor. There are typically legal fees, a filing fee with the court, accounting charges, liquidation expenses, and appraisal fees. All of these expenses eat into the inheritances that will eventually be received by the heirs to the estate.
If you were to use a living trust instead of a last will, the trustee you name in the document would be empowered to distribute assets to the heirs outside of probate. As a result, all of the negatives that we have described above would be avoided.
Consolidation of Assets
Another benefit that goes along with the creation of a revocable living trust is the ability to consolidate assets in one place. This makes it relatively simple for the trustee to gain an understanding of the resources that comprise the estate.
If you have concerns about the money management capabilities of a loved one, you can include spendthrift protections when you establish a revocable living trust. You could instruct the trustee to distribute limited assets over an extended period of time to prevent the trustee from spending all of the money too quickly. A spendthrift clause would also protect the principal from the beneficiary’s creditors.
Attend a Free Seminar
We are holding a series of estate planning and elder law workshops in the near future. There is going to be a considerable amount of very useful information presented, so you can really build on your knowledge if you attend the session that works for you.
While there is no charge to attend any of our seminars, we like to know how many people to expect, so we do ask that you register in advance so that we can reserve your seat. You can visit our seminar schedule page to get all the details and obtain specific registration information.
Schedule a Consultation!
If you would like to go directly to the source to discuss your estate planning goals with one of our attorneys, we are here to help. You can send us a message to request a consultation appointment, and we can be reached by phone at 802-879-7133 in Vermont and 518-389-6020 in the Albany, New York area.