Most of the time, we’re so caught up in the hectic maelstrom of day to day life that we don’t afford ourselves a moment to stop and smell the proverbial (or even literal) flowers. Modern living has so much to keep us busy from the seemingly endless drain on our energy and mental resources that our jobs place on us to the quotidian responsibilities that come with raising a family or simply keeping your home clean and tidy. Yet, it’s only by stopping to take a second that we’re able to really focus on the bigger picture of our lives. How are we setting an example not just for our kids but for all of those we influence? Have we chosen a job or a career that is truly rewarding for us? Do we know that our children will be looked after if something should happen to us?
Whatever our age, when we have a family our thoughts may well turn to what will happen to them if we’re no longer here or no longer able to look after them. In this case, an estate planning attorney can help us to choose the right legal arrangement to protect their interests and ensure that your assets are transferred to them in the right way. For most people, this is simply a matter of making a will, but there are some for whom a Revocable Living Trust may be more appropriate…
What is a revocable living trust?
A revocable living trust allows you to be both the maker of the trust and the trustee of your estate, essentially giving to yourself. Think of it as a transferable pot of assets. You can put any kind of assets you want into the trust, and you can spend or invest the assets put in it. You also have the right to undo it because it is… revocable. It’s designed to cover 3 phases of the trustmaker’s life…
Phase 1- The trustmaker / trustee / you is alive and well. Essentially you go about your business, paying into and taking out of the trust as you see fit.
Phase 2- The trustmaker becomes mentally incapacitated and is unable to make decisions pertaining to their estate any longer. As such you’re no longer able to manage your own financial affairs and/or those of the trust. Fortunately, this kind of trust nominates a “successor trustee” who will step in and manage the funds on your behalf in accordance with your predetermined wishes.
Phase 3- Death. In the event of your death, the revocable trust automatically becomes irrevocable because you are no longer able to make changes to it. Again the successor trustee steps in at this point but rather than keeping hold of the assets on the trustmaker’s behalf, they distribute them in accordance with the trust maker’s wishes.
Why would it be useful to me?
This would be useful to you if you’re worried about what may happen if you’re no longer mentally competent enough to manage your estate. If you work in a high-risk job or have a family history of dementia this may appeal to you. However, it’s worth noting that the IRS and probate courts view revocable trusts a little differently to the irrevocable kind. As such they don’t pass through probate.
It’s just one option in ensuring that your family is as well looked after as possible.