Tag Archive for: estate planning

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4 Misconceptions About Revocable Living Trusts

What is a revocable living trust?

A revocable living trust is an arrangement in which a Grantor (the trustmaker) places their assets and property in a trust, which can be updated and revised by the Grantor while they are alive. The trust is then managed by a Trustee, who is tasked with distributing the assets to the beneficiaries of the trust upon the Grantor’s death.

A probate court does not need to distribute assets and property in a trust, because the property and assets have been allocated to the trust. Since assets in trusts are not subject to probate, having a revocable living trust facilitates the distribution of assets by bypassing the probate process, which can be both costly and timely.

If you have considered including a revocable living trust in your estate plan, it is important to be aware of misconceptions that can affect your plan and leave you with a false impression.

Misconception #1: Assets in a revocable living trust cannot be used by the Grantor.

Assets in a revocable living trust can still be accessed by the trustmaker. The Grantor of a revocable living trust has the option to appoint themselves as the Trustee, the person designated to manage the trust. If this is the case, a Successor Trustee may be appointed to manage the trust in the event of the Grantor’s death or incapacitation.

 

Misconception #2: Once a revocable living trust is signed, the Grantor’s assets are automatically exempt from the probate process.

An unfunded trust is still subject to probate. A trust is considered to be unfunded if the ownership titles of the assets are still in the name of the trustmaker.

In order to “fund” a trust, the ownership titles of the trustmaker’s assets must be transferred from trustmaker to the trust. This includes vehicle titles and financial accounts. In the event of the Grantor’s death or incapacitation, the Trustee (or the Successor Trustee) can only manage the assets in a funded trust. Otherwise, the assets may still face probate.

 

Misconception #3: Revocable living trusts are only necessary for those with large estates or many assets.

It is commonly assumed that estate planning tools, like revocable living trusts, are less important for those with smaller estates. However, an estate does not only encompass money and real estate; Estates also include vehicles, electronic equipment, art, and other valuable possessions.

Further, a revocable living trust offers the Grantor flexibility in how their funds and property will be distributed. A Grantor with minor children may prefer to hold funds in a trust, to be dispersed to their beneficiaries in increments.

 

Misconception #4: Revocable living trusts are always the correct option.

Every estate plan is different. Circumstances, family needs, and assets can all have an effect on how one chooses to plan ahead. Some individuals may find a will to be a superior choice for preserving their wishes, while others may benefit much more from transferring their assets into a revocable living trust.

Information in this article is provided for educational purposes only and not intended to constitute legal advice. Please consult with a licensed attorney in your jurisdiction for help with your specific situation.

When it comes to estate planning, navigating your options can have a great payoff. Seeking the guidance of an estate planning professional can offer much-needed assurance and security.

If you would like assistance with estate planning in Maryland or have questions regarding your situation, we invite you to contact the Law Offices of Elsa W. Smith, LLC at 410-995-7719.

 

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I am a newlywed with few assets. How can estate planning help me?

A marriage is a bond between two people who have pledged to face life together. If you have recently committed to spending the rest of your life with your spouse, there is no better time than now to establish an estate plan.

While preparing for the future can be intimidating, estate planning can ease much of this uncertainty. Newlyweds share a joint effort toward growth and stability, and estate planning is an extension of this aim. Regardless of income, asset value, or homeowner status, newlyweds are in a highly favorable position when it comes to building an estate plan. Where do you begin?

It is helpful to think of estate planning as a way to protect your assets, possessions, and medical preferences. As such, spouses can share this responsibility even if they have few assets or do not own property. A common misconception is that estate planning only encompasses real estate. However, this is not the case. Your estate includes (but is not limited to): motor vehicles, prized personal possessions, heirlooms, and investment accounts.

Newlyweds can begin (or update) their estate plan by having an attorney prepare the following:

 

Will

A well-crafted will can be a source of relief for surviving spouse, family, and loved ones. It includes the decedent’s wishes for the management and administration of their estate. Married couples often combine assets, which can change the nature of an individual’s pre-existing will.

If you have children or plan to have children, a will is a vital avenue for protecting your legacy. Inheritance and guardianship preferences can also be outlined in your will.

Those who have a will and are not yet married, but are planning to be married soon, are highly encouraged to revise their will after marriage. A change in marital status is just one of the significant life events that justify a will revision. Other significant life events include changes in residency, career, and homeowner status.

Power of Attorney

Having a Power of Attorney document in place allows you to appoint an agent to make legal, financial and personal decisions on your behalf in the event that you cannot make these decisions for yourself. Choosing an agent may take some deliberation and discussion with your spouse and the person you decide to appoint. For this reason, it is crucial to start the estate planning process sooner rather than later.

Advance Directive

Advance directives are also important regardless of the size of your estate. In this document, you may choose a healthcare agent to make medical decisions for you. The decision-making power of your healthcare agent can be limited or general. Specific medical preferences, such as “Do Not Resuscitate” orders, are also included in an advance directive.

 

As much as we try to plan ahead for emergencies, unforeseen situations are inevitable. In starting a new life together, you and your spouse should prioritize your approach to financial and medical well-being; these major decisions cannot be left to fate. Those with small estates have the ability to grow and maintain assets in the years to come and take comfort in knowing they are in control.

Information in this article is provided for educational purposes only and not intended to constitute legal advice. Please consult with a licensed attorney in your jurisdiction for help with your specific situation.

Having an estate planning professional not only offers clear communication and direction but allows for peace of mind. An estate plan is a crucial tool to help you achieve your goals, both individual and shared. If you would like assistance with estate planning in Maryland or have questions regarding your situation, we invite you to contact us at the Law Offices of Elsa W. Smith, LLC. 410-995-7719