FAQs

When someone passes away, his or her property must somehow pass to another person. In the United States, any competent adult has the right to choose the way his or her assets are distributed after his or her passing – the main exception to this general rule involves what is called a spousal right of election, which disallows the complete disinheritance of a spouse in most states. A proper estate plan involves strategies to minimize potential estate taxes and settlement costs as well as to coordinate what would happen with your home, your investments, your business, your life insurance, your employee benefits (such as a 401K plan), and other property in the event of death or disability. On the personal side, a good estate plan should include directions to carry out your wishes regarding health care matters, so that if you ever are unable to give the directions yourself, someone you know, and trust can do that for you.

Sadly, many individuals do not engage in formal estate planning because they mistakenly believe that their assets will be automatically shared among their children upon their passing. If you do not make proper legal arrangements for the management of your assets and affairs after your passing, the state’s intestacy laws will take over upon your death or incapacity. This often results in the wrong people getting your assets and may also result in higher estate taxes.

Your estate is simply everything that you own, anywhere in the world, including:

• Your home or any other real estate that you own
• Your business
• Your share of any joint accounts
• The full value of your retirement accounts
• Any life insurance policies that you own
• Any property owned by a trust, over which you have a significant control

When a loved one passes away, his or her estate often goes through a court-managed process called probate (or estate administration) where the assets of the deceased are managed and distributed. Probate can be expensive and tie up the assets of the deceased for a prolonged period before beneficiaries can receive them, so there is good reason to avoid this process. 

A properly drafted Revocable Living Trust (RLT) is a powerful estate planning tool that allows you to remain in control of your assets during your lifetime, have them managed during incapacity, avoid probate, and efficiently and privately transfer your assets to your loved ones at death according to your wishes.

Sometimes referred to simply as a living trust, an RLT holds legal title to your assets and provides a mechanism to manage them. You would serve as the trustee and beneficiary of your trust during your lifetime. You also designate successor trustee(s) to carry out your instructions for how you want your assets managed and distributed in case of death or incapacity.

For the trust to function properly, you need to formally transfer many of your assets to the trust during your lifetime. The fact that it is “revocable” means that you can make changes to it or even terminate it at any time.

Creating a Revocable Living Trust and transferring your assets to the name of that trust will generally not affect your ability to control such assets. During your lifetime when you are mentally competent, you have complete control over all your assets. Because a living trust is revocable, it can be modified at any time, or it can be completely revoked if you so desire. Upon your incapacity, the individuals you designate will be able to transact on your behalf according to the instructions you have laid out in the trust document. Upon your passing, the living trust can no longer be modified and the successor trustee(s) you have designated will then proceed to implement your wishes as directed.