A thorough estate plan will typically involve much more than a Last Will and Testament. Although each estate plan is as unique as the individual creating the plan, many estate plans include at least one trust among the plan. Revocable living trusts, for example, are a common addition to an estate plan. If you choose to include a revocable living trust in your estate plan you will need to name a trustee for the trust. You will also likely need to name a successor trustee. Who you name as the successor trustee will depend, to a large extent, on the purpose of the trust.
Trusts come in many forms; however, they all fall into one of two categories – testamentary and inter vivos, or living trusts. A Testamentary trust is one that does not take effect until your death while a living trust takes effect as soon as all of the formalities of creation are completed and the trust is sufficiently funded. Trusts are also either revocable or irrevocable. While a revocable trust can be modified or terminated at any time by the maker of the trust, an irrevocable trust cannot be changed or terminated by the maker. Revocable living trusts can be used for a variety of reasons. One common reason to create a revocable living trust is for incapacity planning purposes.
When used for incapacity planning, a revocable living trusts works by allowing you to transfer all assets into the trust and then naming yourself as the trustee. While you are capable, you are able to control and manage all thee trust assets as the trustee of the trust. If you become incapacitated for any reason, control will automatically shift to the person named as your successor trustee. Typically, when a revocable living trust is created as part of an incapacity plan, a spouse, adult child, or parent is named as the successor trustee. The goal is to allow legal control of your assets to shift to the person you designate without court interference and as quickly as possible should you become incapacitated. Of course, if you reason for creating a revocable living trust is other than for incapacity planning purposes you may wish to reconsider your choice of successor trustee.
If you are unsure who to appoint as your successor trustee, be sure to consult with your estate planning attorney.
- Changing “Irrevocable” Trusts Through Decanting - October 21, 2021
- Taxation of Nongrantor Trusts - October 6, 2021
- Dangers of Do-It-Yourself Estate Planning - September 27, 2021
