Revocable Trusts Archives - Vickers, Fischer, & Robbins

Why not use pay-on-death or transfer-on-death arrangements for personal property or beneficiary deeds for real estate?

admin — Mon, 14 Jan 2019 22:51:55 +0000

These arrangements do avoid probate. However, they do not address the problem of management of your property during periods of incapacity prior to your death. Furthermore, these methods do not offer a convenient method of prescribing alternate beneficiaries or distribution methods in the event of a change in circumstances. For example, a P.O.D. bank account naming an adult child as a beneficiary would not provide a trust for the grandchildren if the adult child predeceased you or was killed in a common accident.

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Why not just create concurrent estates with right of survivorship, such as joint tenancy?

admin — Mon, 14 Jan 2019 22:51:31 +0000

The most common estate plan is creation of concurrent or joint interests with persons whom you wish to receive your property at your death. This arrangement does have the advantage of avoiding probate, in that if the estate is a joint tenancy or tenancy by the entirety, property will pass to the surviving joint tenant at the death of the other joint tenant. The disadvantage, however, is that if the person to whom you wish the property to pass at your death predeceases you, the property will be subject to probate at your death unless another tenant is subsequently added. If you and a joint tenant were to be killed in a simultaneous occurrence, the property would be distributed pro rata to the respective probate estates of each of you. There would be no alternative disposition specified. The survivorship feature can result in property being vested in minors and in duplicate probate. Furthermore, the creation of a concurrent estate is presumed to create a gift. Thus, if you wish to withdraw or revoke the gift, you could be prevented from doing so by lack of cooperation by the other joint tenant.

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Why should a revocable trust be created?

admin — Mon, 14 Jan 2019 22:50:47 +0000

The most common use of a revocable trust is to avoid probate. Property placed in a revocable trust during your lifetime is not subject to probate at your death. The trustee owns the “legal” interest in the estate, and title in the trustee survives the death of the Settlor. The death of the Settlor is simply an event requiring certain action by the trustee. Though the directions may be more complex, typical directions require the trustee, or surviving co-trustee to pay all expenses of last illness and death and any other unpaid expenses remaining after the Settlor’s death, and to then distribute the balance of the trust property to the beneficiaries that you have designated. In this respect, a revocable trust works much like a will. The difference is the avoidance of some of the costs and formality of probate.

Another benefit of a revocable trust is that it provides a method for management of your business affairs while you are living, if you are disabled or incapacitated. In such circumstances, if most of a person’s property is in such a trust, the appointment of a conservator by the probate court can be avoided, along with the attendant cost, publicity, and inflexibility of administration.

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What is a revocable trust?

admin — Mon, 14 Jan 2019 22:50:14 +0000

Trusts created after January 1, 2005 that do not provide that the trust is irrevocable may be revoked or amended by the Settlor (creator of the trust). Very few living trusts are made irrevocable. Ideally the trust instrument should specify that the trust is revocable and amendable if that is the Settlor’s intention. Most trusts used for estate planning purposes are revocable and amendable by their terms.

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What is a trust?

admin — Mon, 14 Jan 2019 22:49:36 +0000

A trust is an arrangement whereby property is held by one party for the benefit of another. The property may be transferred to another person, or the property may continue to be held by the Settlor after declaring it to be held in trust. The person creating the trust is called the “GRANTOR”, “SETTLOR” or “TRUSTOR.” The person holding the property for the other is called “TRUSTEE.” The Settlor may also be a trustee of the trust he has created. If so, the trustees are known as “CO-TRUSTEES.” The instrument creating the trust tells the trustee how he is to manage the property being held, and what to do with the property upon the happening of specified events or upon the occurrence of specified conditions.

A trust created in a will is known as a “TESTAMENTARY TRUST.” A trust created while the Settlor is living is known as a “LIVING TRUST” or “INTERVIVOS TRUST.”

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