Many people harbor misconceptions about some of the nuances of estate planning. When you hear the word “trust” mentioned you may immediately tune out of the conversation because you are under the impression that these instruments are only useful for the very wealthy.
Wealthy people have to concern themselves with the estate tax. They also may have asset protection concerns. Revocable living trusts are one of the most commonly utilized estate planning devices, and in fact these trusts do nothing to provide asset protection or estate tax efficiency.
Why would you want to create a trust if it will not accomplish these two objectives? Let’s look at two of the reasons why these trusts are so popular among ordinary people.
Fast and Efficient Asset Transfers
With a revocable living trust the trustee will distribute assets to the beneficiaries according to the terms recorded in the trust agreement. These distributions will take place outside of the legal process of probate. This process slows everything down, and the heirs do not receive their inheritances until it has run its course.
Planning Ahead for Possible Incapacity
When you are engaged in the process of estate planning you would do well to consider the period of time that may precede your death. Once you reach the age of 65 it is likely that you will live into your 80s. Clearly, people who have reached such an advanced age sometimes suffer from incapacity.
With a revocable living trust you can name a disability trustee. This individual or entity would be empowered to manage the trust in the event of your incapacitation.