Tuesday, January 24, 2017
Revocable Living Trusts | Using a Trust to Ensure You Have a Lasting Legacy
Summary: Including trusts in your estate plan can have many types of benefits. A revocable living trust may help you avoid the potential delays, expenses and stress that can arise from going through the probate administration process It can also be an invaluable tool in planning to protect yourself in the event that you become mentally incapacitated. Furthermore, your trust planning may help you create a more lasting legacy than you might otherwise enjoy with a will, as your trust may allow you control what happens to your wealth even after your initial beneficiaries have died.
If you are familiar with revocable living trusts, you likely know that they can help you avoid some of the potential drawbacks of probate administration. Depending on the laws and rules in your state of residence, probate can be time-consuming, expensive, stressful and largely devoid of privacy. Depending on the specifics of your situation, the benefits of avoiding these potential pitfalls, along with a trust's potential protective advantages when it comes to planning for mental incapacity, can be substantial.
What you may or may not know, however, is how your trust(s) can help you ensure that the legacy you leave behind is as durable and lasting as you'd want. Some celebrity estates from history offer useful examples. Before her death in 1962, Marilyn Monroe created an estate plan. Her will left most of her wealth to hear acting coach, Lee Strasberg. Beyond the business relationship, Monroe had a very close emotional and personal bond with both Strasberg and his second wife, Paula. Monroe's will requested that her acting coach distribute her belongings, "in his sole discretion, among my friends, colleagues and those to whom I am devoted." This, of course, meant that he had full and complete control over the belongings and they were part of his estate.
The acting coach died in 1982, 16 years after his wife, Paula, passed. Several years before his death, Strasberg married his third wife, Anna. Anna, who was 13 years younger than Monroe, never knew the famous actress but, after Anna's husband's death, the entirety of Monroe's possessions belonged to her. Susan Strasberg, who was the daughter of Lee and Paula, and a close personal friend of Monroe, received nothing.
At this point, perhaps you're saying, "I don't plan to leave my wealth to my acting coach, so I don't really need this type of planning." That may not necessarily be true. Here's an example of how your goals can be thwarted, even if they are fairly straightforward and clearly stated in a will. Imagine a couple, John Doe and Carol Doe, who have three daughters. John and Carol each have wills that say, "100% of my estate to my spouse and, if my spouse has died, then all to my three daughters." John dies unexpectedly. Carol remarries a man named Mike who has three sons but, shortly thereafter, Carol dies. Her will says that her three daughters get 100% of her wealth (which includes the entirety of John's estate.) However, state law gives a surviving spouse the right to "elect against the will," which means that the surviving spouse can choose either the amount listed in the dead spouse's will or an amount spelled out in the state statutes. In some states, that's 50% of the dead spouse's probate estate. In other words, Mike could elect to take his spousal share, collect 50% of Carol's wealth and then transfer those assets to his sons, and it would all be perfectly legal. John would have, however indirectly and unintentionally, ended up leaving his daughters nothing and an inheritance of 50% to three people he did not even know (Mike's sons).
An estate plan with a trust (or trusts) could have created a different outcome for both fictional John and real-life Marilyn. So, how does it work? A trust will include provisions that direct what will happen to the assets funded into it, in terms of distribution, and when those distributions should take place. You have the option of directing your successor trustee to make a full distribution of your wealth and closing the trust upon your death, or you can create instructions that will allow the trust to continue functioning. You may direct that an initial beneficiary can enjoy the trust's assets during his/her lifetime and then, after he/she dies, you can direct who should receive the wealth after that. In this way, you can minimize the chance of your wealth ending up belonging to complete strangers.
Engaging in this type of planning, as with any variety of planning, can trigger certain legal or tax implications. That's why, as with any type of estate plan, it is important to work an experienced professional who can carefully advise you of the benefits and drawbacks of each option available to you.
This article is published by the Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services-company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at www.legacyassuranceplan.com.
This article written and published by:
8039 Cooper Creek Blvd
University Park, Florida 34201
Click Below To See Other Legacy Assurance Plan Related Sites: