You should keep the estate administration process in mind when you are making your estate planning decisions. A lot of people think that the administration of a will is very simple and straightforward, but this is a misconception.
The Probate Process
If you utilize a will to state your final wishes with regard to asset transfers, you would name an executor in the document. This is the individual that will take care of the hands-on tasks that must be completed to administer the estate.
The executor would be required to admit the will to probate, and the court would supervise during the administration phase. It will take at least eight or nine months in most cases, and no inheritances can be distributed while the estate is being probated by the court.
This is one negative, and the loss of privacy is another one. Anyone that is interested can access the probate records to find out how the assets were distributed.
Another drawback is the expense factor. There are a number of different expenses that accumulate during probate, and this red ink will reduce the value of the estate before it is transferred to the heirs.
Living Trust Administration
A revocable living trust can be the ideal alternative to a simple will if you want to avoid probate, and there are other advantages. When you have a living trust, you do not have to be concerned about losing control of the assets, because you would act as the trustee while you are alive and well.
When you are drawing up the trust, you would name a successor trustee to assume the role after your passing. This individual can also be given the ability to administer the trust in the event of your incapacity.
The trustee can be someone that you know personally, or you can alternately use a professional fiduciary. After your passing, the trustee would be able to distribute assets to the beneficiaries outside of probate.
Another major benefit is the ability to include spendthrift protections. You can add a spendthrift clause, and the trust would become irrevocable after your death.
Beneficiaries would not be able to access the principal, and their creditors would “step into their shoes” in a legal sense. This means that the creditors of the beneficiaries would be in the same position, so they would not be able to reach the principal.
To prevent reckless spending, you can leave instructions for the trustee with regard to the way the assets will be distributed. For example, you can allow for distributions of the trust’s earnings on a monthly basis, or you can dictate some other incremental payment arrangement.
Ultimately, you could allow for larger lump sum distributions when the beneficiaries reach certain age thresholds.
Legal Assistance
If you are going to name a family member as the trustee of your living trust, they may feel a bit overwhelmed when they must assume the responsibility. There are legalities that apply to trust administration, and certain specific steps must be taken.
A layperson is simply not going to be able to proceed with confidence, and this is where we can enter the picture to provide the necessary assistance. When we help you draw up the trust, we will be uniquely qualified to provide guidance during the trust administration phase.
Schedule a Consultation Today!
The revocable living trust is the device that is ideal for the widest range of people, but there are other trusts that can satisfy specific objectives. We can gain an understanding of your situation and help you develop a custom crafted plan that is ideal for you and your family.
You can request a consultation appointment at our Memphis, Tennessee estate planning office if you send us a message or call us at (901) 763-2500 or (866) 997-6325 or fax us at (901) 763-2525.
