Today you feel alive, mentally competent, with little or no concern for how your hard-earned financial assets might be distributed in the event of your untimely demise. But, what if due to some unforeseen circumstance you cease to be alive, or suddenly lose your mental competence?
A revocable living trust, or living trust, is one estate planning option available to you. Living trusts are frequently more appealing to younger individuals, since they can be changed or even rescinded. After setting up your living trust, there are essentially three stages in the implementation of that trust.
Establishing a Living Trust
First of all, establishing a living trust, or a revocable living trust, is something that should be done with a knowledgeable estate planner. A living trust is a lawful document that you create with a lawyer to determine how your money, property, or other assets are distributed and to whom.
You are the Trustmaker and in complete control, unless you otherwise choose to appoint a trustee within the original document. A trustee or executor will need to be assigned in the event you are deemed mentally incompetent or die anyway, so having one from the outset is advisable. The assignment of trustee responsibilities can be altered while you are still deemed mentally fit, plus those rights can be revoked.
There are three basic stages in a revocable living trust.
Stage 1: Alive and Well
In this initial stage of a living trust, you are alive and well. The trust arrangement customarily will afford you the same abilities to manage and manipulate your money and assets as if there was no trust in place. You go about your business as usual. During this stage of a revocable living trust, you will be essentially the trustee, and the trust will legally establish this detail.
Stage 2: Mentally Incapacitated
Within your trust agreement, you will have setup procedures to be followed in the event you are deemed mentally incapacitated. This can be especially beneficial in the event that a catastrophic accident happens in your life that renders you unable to make your own decisions.
Your living trust will name a successor or disability trustee who will be entrusted with taking over the management and investment of the funds designated by your trust. By having a disability trustee named before you become mentally unable to see to your own affairs, you will be assured that a trusted individual handles your finances, your bills and obligations will continue to be paid, and your estate will not revert to the control of a probate court.
Stage 3: Death
The final stage in the process of a living trust is of course the point when you as the Trustmaker are no longer living. Your living trust will include detailed instructions of who will receive the balance of your assets after all your outstanding debts have been satisfied. The administrative trustee, usually the same person you designated as your disability trustee, distributes your assets according to the wishes you established while you were alive.
Handling your estate planning before you die or lose your mental faculties is always the best choice. Having a revocable living trust in place before you need one can relieve your family of the unnecessary stress if for some reason you suddenly are rendered mentally incapacitated or die. By having an established living trust, you will avoid the most important calamity of sudden mental illness or death, the dreaded probate court.
Share18 November 2014
