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Mendelson Law Firm

Memphis TN Estate Planning & Creditors Rights Attorneys

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Living Trust FAQs

Aren’t living trusts only for the wealthy?

People that have been successful financially may choose to use living trusts. However, this type of trust can be very effective for a person of relatively ordinary means for a number of different reasons. Very high net worth individuals would not use a living trust because the assets in the trust would be part of their estate for tax purposes. There are irrevocable trusts that can be utilized by wealthy people that have estate tax concerns.

Do you lose control of assets that you transfer into a living trust?

No, you would act as the trustee while you are alive and well, and you would have total access to the assets at all times.

Can you change the terms of the trust after it has been created?

Yes, relatively minor changes can be implemented using an amendment, and a restatement can be used to make major changes. This is a revocable trust, so you can actually dissolve the trust if you choose to do so, and it would no longer exist. You would reassume direct personal possession of the property that you conveyed into the trust.

Is probate a factor when a living trust is being administered?

No, the distributions to the beneficiaries would not be subject to the probate process. On the other hand, if you use a will as an asset transfer vehicle, it would be admitted to probate. This process will typically take eight or nine months at minimum, and no inheritances are distributed while the estate is being probated. It is a public proceeding, so there is a loss of privacy, and probate expenses reduce the value of the estate.

What happens if you become incapacitated?

This is a good question because a significant percentage of elders become unable to handle their financial affairs eventually. If you have a living trust, you will name a successor trustee to administer the trust after your death. You can also empower the successor (or someone else) to administer the trust if you become incapacitated.

Who can act as the trustee of a living trust?

Any mentally competent adult that is willing to take on the responsibility can technically act as the trustee. Another option is a professional fiduciary. Trust companies, the trust departments of banks, and certain professionals will provide trustee services for a fee.

Aside from the avoidance of probate, are there any other benefits?

One of the most significant benefits is the ability to provide spendthrift protections. If you are going to be leaving an inheritance to someone that is not ready to handle a significant sum of money, you may want to leave a direct, lump sum bequest. Under these circumstances, you could include a spendthrift provision when you establish a living trust. After your passing, the trust would become irrevocable, and the beneficiary would not be able to access the assets in the trust. They would have to go through the trustee. In a legal sense, the beneficiary’s creditors would “step into their shoes.” Since the beneficiary does not have access to the assets, this would also apply to their creditors, so there would be an asset protection element. With regard to the nature of the distributions, you can leave instructions for the trustee. You could allow for monthly distributions, and you can set a dollar amount. Some people will instruct the trustee to distribute the trust’s earnings broken up into monthly increments. The trust can potentially stay active for up to 21 years, so it can provide ongoing income for an extended period of time.

Schedule a Consultation Today!

As you can see, a living trust is a very effective estate planning tool that is the best choice for a wide range of people. You can establish a living trust as a single person, and a married couple could potentially utilize a shared living trust.

If you are ready to get started, you can schedule a consultation at our Memphis, TN estate planning office if you give us a call at 901-763-2500 or 866-997-6325. There is also a contact form on this site you can fill out if you would like to send us a message.

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MENDELSON LAW FIRM
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