Thursday, March 23, 2017
Revocable Living Trust | Your Estate Plan Can Protect You in Many Ways, Some of Which May Surprise You
Summary: Many people are aware that some forms of estate planning can offers a certain type of protection as one of their benefits; namely, protection. But they may also do more. They may protect you from the potential costs and delays of probate administration, they may protect you from the loss of privacy deriving from having the details of your estate become public record, they may possibly protect you from potentially unnecessary and stressful conservatorships proceedings in court, and they may even potentially protect you from claims by people professing to be your heirs who were left out of your plan. Properly drafted and implemented, a complete estate plan can do many things for you and your family, probably even more than you would have thought.
A lot of people who are familiar with estate planning know that you can plan to avoid probate. Planning to avoid probate can help save you time, money and stress, as probate administration can be drawn out and expensive. An estate plan with a revocable living trust isn't the only way to avoid probate administration, but an estate plan with a living trust and its companion, the "pour over" will, can accomplish several other ends that may have great value for you.
This form of planning may also protect your privacy. In many locations, probate administration case files are public record, meaning that anyone potentially can look at the contents of your estate simply by requesting your estate's file from the court clerk. If, however, your wealth is funded into a living trust, you avoid this as, in most states, living trusts and the distribution of their assets are not matters of public record and their details cannot be accessed by anyone with a file number. In addition, a plan with a properly funded living trust may be able to reduce the possibility of needing to go to court to seek appointment of a conservator to make financial decisions on your behalf should you become mentally incapacitated and be unable to make decisions for yourself. With a living trust, the management of your funded assets transfers seamlessly from you to the successor trustee you chose if you become incapacitated.
However, your estate plan with a living trust may provide you with an additional protection that is not as well known: protection against people claiming to be your long-lost children in order to get a portion of your wealth. Generally, the law assumes that all parents want to leave something to all of their children. So, in general, the laws have a default inheritance for children. This means that, if someone who isn’t in your will goes to court claiming to be your child, and the judge rules that they are legally your child, then they may get a “cut” of your estate.
In some states, though, that rule applies only to a person’s probate estate. Oklahoma, for example, has explicitly ruled that these “pretermitted heirs” rights to a distribution do not extend to the assets funded into a living trust. In other words, if someone files a court claim alleging that they are your long-lost “love child,” and you have a fully funded living trust, then it doesn’t matter what the court decides about that person’s parentage, they still cannot take anything from your trust.
All this goes to show that proper estate planning, including the possibility of incorporating a living trust into your plan, has many potential benefits and multiple ways in which your plan can be a value protector to both you and your family.
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