One of the more popular estate planning tools today is the revocable living trust. Even though a lot of people create these trusts to avoid probate, many people don’t realize that these devices can also help protect them in the event they become incapacitated.
A proper incapacity plan should be a key piece of every comprehensive estate plan. Knowing how your revocable living trust interacts with your incapacity plan is important if you intend to get the most from your estate planning efforts.
Trusts and Your Property
To better understand how your trust will affect your ability to protect yourself and your property, we first have to understand how your trust will operate. On a day-to-day basis, people who have a living trust won’t do much different than people who do not have one. When you create your living trust you will likely name yourself as both the beneficiary and the trustee. This means that you both use all of the personal property you transfer into the trust’s name, and manage it on behalf of yourself. This allows you to control your property at all times regardless of whether it is in your name, or the trust’s name.
Incapacitated Trustees
So, after creating the trust and using it to own your property, the question of what happens should you lose your ability to manage it arises. What if you suffer a serious injury or illness that leaves you incapacitated? Who will manage the trust then?
The answer is the successor trustee. When you create the trust document, you will name not only a beneficiary and trustee, but you will also name a successor trustee. This person is responsible for managing the trust if and only if you die or become incapacitated. When this happens, the successor trustee has the authority to step in and begin managing the trust property. If you have died, it is the successor trustee’s job to distribute trust property to your heirs. On the other hand, should you become incapacitated, it is the successor trustee’s job to manage trust property until you are able to return to your management duties.
Other Tools
An incapacity plan is not complete if it only includes a revocable living trust. Though your trust will allow you to name someone who will have the authority to step in to manage trust property on your behalf if you become incapacitated, it doesn’t provide you with other essential protections. For example, your incapacity plan will also need to include an advance medical directive that will allow you to name someone who will make medical decisions for you should you no longer be able to express yourself.
- The Government Estate Plan for Intestacy - July 6, 2020
- Do Not Forget to Update Your Estate Plan after a Divorce - July 4, 2020
- Can I Be the Trustee of My Own Living Trust? - July 2, 2020
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