By Jennifer L. Fulton, Esquire
A revocable living trust is part of a complete basic estate plan. Once drafted, it also has to be funded. Why would anyone want to go to all that work? The reason many attorneys favor including a revocable living trust is because, together with the other tools in a basic estate plan, it works to protect you and your loved ones both during your lifetime and after you pass.
First, a funded revocable living trust bypasses probate. This is helpful because probate often ties up assets that otherwise might be needed to pay bills for several months.
A funded revocable living trust also protects the grantor during a period of incapacity. Your successor trustee will handle your finances for you if you are ever physically or mentally unable to do so. When used together with your health care directives, this usually avoids the need for a guardianship.
While these two objectives can also be accomplished with joint ownership, it can have unintended consequences, and is not recommended except with a spouse. Even if your joint owner is trustworthy, you are at risk of losing money if he or she gets a divorce, files for bankruptcy, or is a defendant in a lawsuit.
A revocable living trust does not protect you as grantor from creditors. However, it can provide protections to your beneficiaries after your death. You can leave funds in trust for them rather than giving money to them outright. They can receive income distributions, and principle at stated ages, or if appropriate for a particular need.
Your trust can protect your beneficiaries’ inheritance from most of their creditors by giving a trustee discretion to pay money on their behalf rather than directly to them if it would be garnished.
You can also protect your loved ones in the event of divorce by including language to withhold distributions at risk during a divorce. It also gives the beneficiary a nest egg with which to start over.
Trusts can protect your loved ones from losing their inheritance due to disability. Language can be added giving discretion to pay expenses on their behalf if a beneficiary’s inheritance would make them ineligible for government benefits.
It can also protect your loved ones from addictions by including language that allows for treatment and payments on their behalf, but not directly to them, until a medical professional says they are in recovery.
A revocable living trust does not require a separate tax ID number during your lifetime, and you can change your trust at any time.
In short, an estate plan that includes a funded revocable living trust can help you live with minimal disruption during life, and provides a relatively seamless transition and important protections to your loved ones upon your death. That is what the fuss is all about!
Jennifer L. Fulton, Esq. is an attorney at The Law Offices of Robin Bresky(www.breskylegal.com) focusing on Estate Planning, Probate, and Estate and Trust Administration. A member of the Florida Bar since 1996 with a Juris Doctor degree from Nova Southeastern University, Fulton works with clients to plan for the milestones of life (college, “adulting”, marriage, children, grandchildren, aging parents, pre- and post-divorce, loss of a spouse, aging, diminished mental capacity) and administration upon death. She can be reached at 561-994-6273 or EstatePlanning@BreskyLegal.com.