When you are creating a will or revocable trust as part of your estate plan, you need to think carefully before selecting someone to act as a personal representative or trustee. Many people just go with their nearest relative, such as a spouse or eldest child, but a fiduciary’s role is not ceremonial. An executor or trustee must be financially responsible and demonstrate the willingness to comply with legal deadlines and court orders. Failure to do so can lead to a substantial delay in administering your estate or trust.
Revocable Living Trusts have become the basic building block of estate plans for people of all ages, personal backgrounds, and financial situations. But for some, a Revocable Living Trust may not be necessary to achieve their estate planning goals or may even be detrimental to achieving those goals.
What Are the Advantages of a Revocable Living Trust Over a Will?
Revocable Living Trusts have become popular because when compared with a Last Will and Testament, a Revocable Living Trust offers the following advantages:
- A Revocable Living Trust protects your privacy by keeping your final wishes a private family matter, since only your beneficiaries and Trustees are entitled to read the trust agreement after your death. On the other hand, a Last Will and Testament that is filed with the probate court becomes a public court record which is available for the whole world to read.
- A Revocable Living Trust provides instructions for your care and the management of your property if you become mentally incapacitated. Since a Last Will and Testament only goes into effect after you die, it cannot be used for incapacity planning.
- If you fund all of your assets into a Revocable Living Trust prior to your death, then those assets will avoid probate. On the other hand, property that passes under the terms of a Last Will and Testament usually has to be probated. A probate could add thousands of dollars of costs at your death.
Why Shouldn’t You Use a Revocable Living Trust?
Choosing a trustee to manage your trustee is a very important decision. The very fact that the word “trust” is a part of the title given to this person implies that your trustee should be someone that you trust completely. The reason you must trust this person is, depending on the type of trust you establish, that your trustee can perform financial duties on your behalf that could have a huge impact on your financial well-being. For example, you may give your trustee the power to buy and sell property, collect income on your behalf, pay bills, file and pay taxes, make investments and provide for the financial support of your family.
Of course, a trustee is required to maintain and keep accurate books and records; however, in cases of abuse, these records are often forged to hide the abuse. Therefore, your trustee is someone that you trust completely to manage your finances for you and for your family.