Estate planning strategies inevitably differ based on the individual's needs. Texans who are in the process of deciding what form of estate plan they want to use might be confused by all the available options. Trusts are a common method of estate planning. However, those who have a revocable living trust could be missing out on the advantages they can use with a living trust. Knowing those advantages is step one in utilizing and maximizing them.
With a living trust, the owner and his or her spouse will transfer title of most assets to the trust. They will then be the co-trustees, maintain control and handle them as if there was no trust at all. The difference is that the owner is the trustee and not the owner anymore. With a living trust, a main benefit is that it avoids probate. When the owner dies, the successor trustee becomes the trustee and manages the assets. They can then be distributed or other actions can be taken based on the trust and its requirements. Since probate can be costly and take time, this is a significant benefit.
The living trust also accords more privacy than a conventional will. There is no public record or the terms of the trust as there are with wills. A trust is advantageous if the owner is disabled. Just as when the owner dies, the successor trustee can take over the trust and manage it. This can be preferable to a power of attorney. There are mistakes that people often make with a living trust. Not transferring legal title of assets into it is one - this is also referred to as funding the trust. For the trust to work as designed, the person must transfer the legal assets into it. This can take time and some work, but people who do not do it will regret it.
Successor trustees are vital to the process, but many people will not bring in the successor trustee soon enough so the transfer is a smooth one. Informing the successor trustee of the plan and familiarizing them with the assets is key. Before determining the best vehicle for a comprehensive estate plan - whether it is a living trust or not - it is wise to speak to a legal professional who has extensive experience in types of trusts and which would be best for the individual circumstances. That is the first call that a person who is taking the necessary steps with estate planning strategies should make.
Source: forbes.com, "7 Big Estate Planning Mistakes -- Not Making Full Use Of A Living Trust," Bob Carlson, Feb. 28, 2018