Revocable Living Trusts are frequently incorporated into estate plans. Administered properly, Revocable Living Trusts can assist in the avoidance of costly and time-consuming probate administration that can frustrate a person’s beneficiaries for many months (if not years) following death. A well-developed estate plan will focus on probate avoidance which ultimately benefits the deceased’s family/beneficiaries.
While probate avoidance is reason enough to incorporate a Revocable Living Trust into an estate plan, there is a second benefit that, in certain circumstances, is far more important than probate avoidance – planning for incapacity.
Frequently I see elderly individuals suffering with some level of mental decline, from frequent forgetfulness to debilitating dementia. We can live for many years in reduced mental states and families are rarely prepared for the repercussions. This lack of preparation causes tremendous stress that often leads to family conflicts.
Revocable Living Trusts are great tools for dealing with potential incapacity issues. An individual can create a Revocable Living Trust for their own benefit and serve as their own trustee until such time that someone else should step in to manage the person’s financial affairs. The Revocable Living Trust holds title to assets that the individual otherwise would own in his or her own name (such as bank accounts and a home). The individual can appoint trusted loved-ones or others to step in and serve as successor trustee at in the event of the individual’s incapacity.
In my opinion, not everyone needs to have a Revocable Living Trust, especially married couples that hold most assets in joint name. However, I would normally recommend a Revocable Living Trust to any older individual that has assets in his or her own name which is most common when an individual is unmarried (e.g., a widow/widower).