Estate Planner May-June 2006
A living trust is one of the most flexible, effective estate planning tools available. It contains instructions for managing and distributing your assets in the event you become incapacitated and when you die. It also avoids probate – an expensive, time-consuming and very public court proceeding.
A will also is an essential estate planning document, but a will by itself won’t avoid probate and functions only after your death; it won’t provide for the management of your assets if you become incapacitated. Assuming no incapacity, a living trust gives you complete control over your assets during your lifetime. You can revoke the trust or dispose of the assets in any manner you wish.
For an asset to be covered by your living trust, it’s important to change the asset’s title from your name to the name of the trust. Any assets titled in your name (unless governed by a beneficiary designation) will be subject to court-appointed guardianship if you become incapacitated and to probate at your death.
Ordinarily, this doesn’t present a problem when you first set up your living trust – your attorney will remind you to change the title of your home, life insurance policies, retirement plans and other assets. But once your living trust is signed, it’s easy to forget to change the title of property you acquire later.
If you don’t know whether all of your assets are properly titled in your living trust’s name, consult your estate planning advisors to discuss. If all your assets aren’t properly titled, the living trust may not serve its purpose.