OVERVIEW
A Revocable Trust is an arrangement in which you transfer ownership of your property into a trust while still retaining control of the assets during your lifetime. If you become incapacitated or upon your death, the successor trustee you have named will manage and distribute your assets according to the terms set forth in the trust.
A Revocable Trust allows you to:
- Control your property during your lifetime.
- Receive income and principal from trust assets.
- Ensure an orderly and uninterrupted management of assets in the event of incapacity or death.
MECHANICS, CREATION, AND FUNDING OF TRUSTS
- Creating the Trust – A trust is drafted by an attorney.
- Transferring Assets – You must transfer assets into the trust; only assets in the trust are controlled by it.
- Maintaining Control – You can serve as the initial trustee until incapacity or death.
- Revocability – The trust can be revoked or amended at any time before incapacity or death.
Upon incapacity or death, the trust becomes irrevocable, and the successor trustee assumes management responsibilities.
WHY CHOOSE A CORPORATE SUCCESSOR TRUSTEE?
When naming a successor trustee, many people prefer a corporate trustee for the following reasons:
Infrastructure and Capacity
Corporate trustees have:
- Sophisticated record-keeping systems to manage trust assets.
- Tax reporting tools to handle annual tax filings.
- Advanced investment platforms for managing diversified assets.
- Market analysis tools to ensure sound investment decisions.
Longevity
- Corporate trustees do not retire, become incapacitated, or pass away.
- Trust companies provide continuous and uninterrupted service.
Objectivity
- Corporate trustees are unbiased and free from family dynamics or conflicts.
- They make decisions based on the trust document, not personal relationships.
Experience and Expertise
- Corporate trustees employ legal, tax, and investment professionals.
- They administer multiple trusts daily and ensure compliance with all legal requirements.
Regulatory Compliance
- Corporate trustees follow strict regulatory oversight and fiduciary standards.
- They help avoid errors in trust administration.
Attentiveness and Recordkeeping
- Corporate trustees provide detailed and accurate financial statements.
- They ensure trust assets are properly managed and reported.
Peace of Mind
- Professional trustees provide reliable management, ensuring your wishes are executed properly.
WHAT HAPPENS IF YOU BECOME INCAPACITATED?
If you become incapacitated, your successor trustee will assume responsibility for managing the trust.
Duties of the Successor Trustee During Incapacity:
- Continue managing trust assets without court approval.
- Pay bills and ongoing expenses, including medical care.
- Establish a budget for necessary expenses.
- Prepare and file federal and state tax returns.
- Invest and manage trust assets for long-term growth.
- Provide financial reports to trust beneficiaries.
With a Revocable Trust, your family avoids the delays and costs associated with a court-appointed conservatorship.
WHAT HAPPENS UPON YOUR DEATH?
Upon death, the successor trustee will:
- Manage and distribute trust assets according to the trust document.
- Meet with heirs and financial advisors to coordinate asset transfers.
- Obtain valuations and appraisals of estate assets.
- Settle debts and handle claims against the estate.
- Invest trust assets for the benefit of beneficiaries.
- Prepare final tax returns and provide accountings to beneficiaries.
- Ensure privacy since trust documents are not public records, unlike a will.
A Revocable Trust eliminates the need for probate, allowing assets to be distributed efficiently.
ADVANTAGES OF A REVOCABLE TRUST
Built-in Disability Planning
- If you become incapacitated, a successor trustee steps in immediately, avoiding court intervention.
Privacy Protection
- Unlike a will or conservatorship, a trust is a private document, shielding financial affairs from public scrutiny.
Financial Institution Recognition
- Most banks and investment firms recognize and honor trust documents, reducing administrative delays.
Continuous Asset Management
- Unlike a will, where assets may be frozen during probate, a trust allows uninterrupted investment and management.
Avoidance of Probate
- Trust assets bypass probate, allowing for faster and more efficient distributions to heirs.
Dual Purpose: Will and Disability Plan
- A Revocable Trust can serve as both an estate plan and a disability plan, ensuring control over financial affairs in all situations.
Simplified Asset Distribution
- A trust ensures a clear, structured, and efficient transfer of assets.
Guardianship Planning for Minor Children
- A trust allows detailed provisions for minor children, eliminating the need for court-supervised guardianship.
CONCLUSION
A Revocable Trust allows you to:
- Control assets during your lifetime.
- Ensure professional management in the event of incapacity.
- Provide for seamless distribution to heirs upon your death.
With life expectancy increasing and incapacity risks on the rise, a Revocable Trust provides security, privacy, and efficiency. Naming a corporate trustee ensures expertise, longevity, and unbiased asset management.
Proper estate planning today can safeguard your legacy and provide peace of mind for you and your family.
This article is strictly for informational purposes and is not an offer or solicitation for any transaction. The information provided does not constitute legal, tax, or investment advice. For professional guidance, consult an attorney or tax professional.
Investment advisory services are offered through CWM, LLC, an SEC Registered Investment Advisor. Carson Partners, a division of CWM, LLC, is a nationwide partnership of advisors. The views in this article do not necessarily represent those of CWM, LLC. Information is based on sources believed to be reliable; however, accuracy cannot be guaranteed.
