Creating a living trust forms an essential part of a robust estate plan. While you’re alive, you serve as the trustee, maintaining complete control over your assets. But what happens after you’re gone?
Enter the successor trustee, a role that becomes operative upon your death or incapacitation. The successor trustee’s responsibility is to manage the trust assets and ensure your beneficiaries get their inheritances as outlined.
Debunking the Myth: Why Opt for a Living Trust?
Contrary to popular belief, living trusts aren’t only for the wealthy. Many people assume that a simple will is enough, but let’s debunk that myth.
Wills go through probate, a legal process under court supervision. Probate is time-consuming – often taking at least nine months – and costly, involving numerous fees for various professionals and processes. Plus, it’s a public affair, meaning your estate details become public record.
A living trust helps you avoid probate entirely. The successor trustee can distribute the assets directly to the beneficiaries without court intervention.
Living trusts also offer spendthrift protections, shielding the principal from beneficiaries’ creditors and allowing for controlled asset distribution over time. On top of that, having all assets under the trust umbrella streamlines asset identification and preparation.
Criteria for Trustee Selection
The selection of a successor trustee should be neither arbitrary nor an afterthought. Anyone above the age of 18 and mentally competent can legally serve as a trustee. But the role demands fairness, competency, and sound judgment. Here are some criteria to guide your decision:
1.) Trustworthiness: Your trustee must be reliable and have a strong ethical backbone.
2.) Financial Savvy: They should have at least a basic understanding of financial matters, investments, and taxes.
3.) Time Commitment: Administering a trust can be time-consuming; make sure the person you choose can commit.
4.) Conflict Resolution: Ability to mediate disputes among beneficiaries can be a huge asset.
Your spouse or another family member can be the successor trustee, but they must satisfy these criteria. Alternatively, trust companies and banks offer professional trustee services for a fee, and they often bring experience and specialized skills to the table.
What About a Disability Trustee?
Incapacity is an uncomfortable topic, but it’s a necessary one. Cognitive impairments, including Alzheimer’s, are not uncommon among elders. A disability trustee can step in should you become unable to manage your affairs. This role can be filled by the same individual or entity as the successor trustee or someone else altogether.
Summing It Up
In conclusion, a living trust offers numerous advantages over a will, from avoiding probate to enabling more flexible asset distribution. And at the heart of a well-functioning living trust lies the successor trustee, a role you should assign with great care and consideration. Make the right choice, and you’ll ensure a smoother, faster asset distribution process for your loved ones.
Attend a Free Webinar!
We conduct webinars on an ongoing basis that cover some of the key topics that people typically have questions about. There is no charge to attend the sessions, and they couldn’t be any more convenient, so this is a great way to build on your knowledge.
To see the dates and obtain registration information, head over to our estate planning webinar page.
We Are Here to Help!
If you have already learned enough to know that it is time for you to work with a lawyer to put a plan in place, we can help. You can schedule a consultation at our Phoenix, AZ estate planning office if you call us at 888-222-1328, and you can use our contact form if you would prefer to send us a message.
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