A Well-Drafted Revocable Trust Protects your Family Even After you’ve Died
A well-drafted Revocable Living Trust can provide for the efficient management of your assets both during your life and after your death.
The phrases Revocable Living Trust, Revocable Trust and Living Trust refer to the same legal document. The document is called a "Living Trust" because it's created during your lifetime, a "Revocable Trust" because the terms of the trust can be changed and "Revocable Living Trust" to include both phrases and avoid confusion.
A Revocable Living Trust, when well-drafted by an experienced estate planning attorney, can:
1) protect your children’s inheritance if your spouse remarries;
2) protect the money you left to a child if they are involved in a divorce
3) protect the money you left to your child from claims of their creditors; and
4) protect the government benefits of a special needs child who inherits money from you.
What is a Living Trust?
A trust is basically a legal agreement between three parties:
1. The person who creates the trust, who is referred to as the Grantor;
2. The person who holds legal title to the trust assets, who is referred to as the Trustee; and
3. The person who receives the benefits of the trust property, who is referred to as the Beneficiary.
When you (either an individual or a married couple) establish a Revocable Living Trust for estate planning purposes, you will initially occupy all three positions as Grantor, Trustee, and Beneficiary. You, as Grantor, create the Trust Agreement and transfer your assets to yourself as Trustee. As Trustee, you hold title to the assets for your own benefit as Beneficiary. From a practical standpoint, you will not experience much difference in the management of your assets. You can buy, sell, trade, do whatever you choose with your assets—just like you do now. However, from a legal perspective, you own title to your assets as Trustee, which has significant consequences. A person holding title to assets as Trustee owns them in a fiduciary capacity— meaning he or she must hold the assets for the best interest of the Beneficiary according to the terms of the Trust Agreement. The Trustee does not own the property in their individual capacity. That is, they cannot treat the Trust property as their own, and must keep it separate from their own property.
Avoiding Probate Process with a Revocable Living Trust
In addition, if the person who occupies the position of Trustee changes, there is no need to transfer title to the Trust property. The position of Trustee is a legal status defined by the Trust Agreement, and whoever occupies that position is the owner of the Trust property. Accordingly, when you die, there will be no need for probate because legal title to your assets will remain in the name of the Trustee, even though it is a Successor Trustee that you specified when
you originally created the Trust. The Successor Trustee will distribute your assets according to your instructions outside of the probate process.
In addition to avoiding probate at your death, a properly drafted Trust will avoid living probate in the event of your incapacity. For example, if you suffer a major stroke and are unable to manage your financial affairs, your Successor Trustee will have complete authority to handle all of your financial
affairs without the involvement of the probate court.
Leave a Legacy, Not a Predicament
At Joseph L Motta Co., we believe in helping families to leave a legacy and we work hard to carefully draft the proper legal documents that takes each individual's needs into consideration. If you have questions about preserving your assets using effective estate planning strategies, please call our office at 440-930-2826 to schedule a free consultation .
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