If you are working on an incapacity plan, you may wish to consider the use of a revocable living trust. Like its counterpart, the irrevocable living trust, a revocable living trust takes effect during your lifetime. Although a revocable living trust does not offer the same asset protection or estate tax benefits as certain irrevocable trusts, it does allow you the benefit of being able to make changes to the trust. A revocable living trust can also be an extremely attractive incapacity planning tool that can be used in your estate plan.
In the absence of a revocable living trust, if you become incapacitated, your loved ones may need to seek court intervention through a conservatorship proceeding — first to determine if you are incapacitated and second to determine who will control your assets. A revocable living trust eliminates the need for court intervention.
When you create your revocable living trust, you can name yourself as the trustee as well as the beneficiary. You may also choose to name a spouse or partner as beneficiary. You must then allocate assets to fund the trust. Finally, you need to decide who will be the successor trustee. This person will have control over the trust in the event you become incapacitated.
One the most attractive components of a revocable living trust is that you get to define “incapacity”. In other words, you will determine what has to happen before the successor trustee takes over control of the trust. You may focus on specific physical or mental conditions, require a specific number of doctors to agree, or designate a panel if you choose in order to declare you incapacitated. Once you have been declared incapacitated, according to your own definition, your successor trustee can immediately assume control and use the trust assets to care for you and/or your family.
If you are concerned about incapacity planning (and you should be), consult with an experienced and qualified estate planning attorney.
- Things to Consider Before Deciding To Do Your Estate Plan on Your Own - October 26, 2021
- MYTH:Most People Have a Will and that’s All They Need - October 24, 2021
- The Error Free Estate Plan–Is It Possible? - October 22, 2021