This blog post is a continuation of my series on the top reasons to consider forming a revocable living trust for your estate. If you missed the first post in this series, you can check it out here.
To recap, a trust is a private agreement made between the person who creates the trust (the “settlor”) and the person named to look after the property on the settlor’s behalf (the “trustee”). The most common estate planning document used as a will substitute is a revocable living trust. The “living” part of “revocable living trust” means that the trust is created while the settlor is alive (or “living”) and the “revocable” part of the name refers to the fact that the trust can be changed or revoked by the settlor while they are alive. In the first post in this series, we discussed the advantages a trust provides by being a private document, unlike a Will which becomes public and is filed with the court after you die.
The second major reason in my mind to consider a revocable living trust is to plan for the management of your affairs in the event you are unable to manage your own affairs, or simply no longer wish to manage your own affairs. If you properly title the assets in the name of your revocable living trust, anyone that you name as trustee can legally manage the property on your behalf. You can name yourself as initial trustee, and perhaps a spouse or child as a successor trustee. Let’s imagine that you are getting older in age and decide that you no longer want responsibility for paying the bills, or the property taxes on your home or family cabin. You can appoint a child as trustee, and if all your accounts and real property are already held in the name of the trust, the new trustee can seamlessly begin managing your property for you. This can also be useful in a situation where you go south for the winter, and spend multiple months in another state.
No matter your age, in the event you are incapacitated for any reason, such as illness or an accident, your successor trustee can take over the management of the trust until you recover. Without a trust or valid power of attorney for finances and property in place, your heirs might be forced to go to court to get appointed as legal guardian in order to manage your affairs while you recover. Going to court can be a costly process, as it often involves hiring an attorney, and convincing a judge why the person applying to be guardian should be appointed as guardian of the estate and/or the person of the incapacitated party. If you have a revocable trust set up and all of your assets are inside the trust, and you pair this with a valid power of attorney for healthcare, the need for a costly legal guardianship proceeding is usually eliminated. As I mentioned earlier, a valid power of attorney for finances and property can also appoint someone to for manage your affairs when you are incapacitated. However, I should note that many lawyer and trust officers have told me that banks are more comfortable dealing with trustees appointed under trust documents, so as a practical matter it is often easier to manage property as a trustee than it is under a power of attorney document.
This is just the second of many good reasons to consider a revocable living trust in your estate plan. Stay tuned for future blog posts in this series.
The information contained herein is intended for informational purposes only and is not legal advice, nor is it intended to create an attorney-client relationship. For advice regarding a specific legal issue, please contact me or another attorney for assistance. Attorney Thomas B. Burton is the owner and operator of The Law Office of Thomas B. Burton, a virtual law office serving clients throughout Wisconsin and Minnesota.
