What is a Living Revocable Trust with an Incapacity Clause?
Why Create a Living Revocable Trust with an Incapacity Clause?
1. Control: A Living Revocable Trust allows the trust creator to maintain control over their assets during their lifetime, unlike a will, which only takes effect upon death. The trust creator can manage the assets, make changes to the trust, and even revoke it if they choose to do so.
2. Privacy: Unlike a will, a public document that must go through probate, a Living Revocable Trust is a private document that does not require probate. This means the trust terms and assets remain confidential and are not subject to public scrutiny.
3. Avoiding Probate: Probate is the legal process of distributing assets after death. Probate can be a lengthy and costly process that ties up assets for months or years. By creating a Living Revocable Trust, the trust assets can be distributed without probate, saving time and money for the trust beneficiaries.
4. Incapacity Planning: An Incapacity Clause in the Living Revocable Trust allows for the appointment of a trusted individual to manage the trust assets in the event of the trust creator’s incapacity. This clause avoids costly and public court-appointed guardianship, ensuring that a trusted individual handles the trust creator’s financial and medical decisions.
Considerations When Creating a Living Revocable Trust with an Incapacity Clause
1. Choosing a Trustee: The trustee appointed in the Incapacity Clause should be someone they trust implicitly to manage their affairs in the event of incapacity. The trustee should be financially responsible, organized, and willing to take on the responsibilities of managing the trust assets.
2. Funding the Trust: To ensure that the Living Revocable Trust is effective, the trust creator must transfer assets into the trust. Assets not transferred into the faith are not protected and may be subject to probate.
3. Updating the Trust: A Living Revocable Trust should be updated regularly to reflect changes in the trust creator’s life, such as new assets, changes in beneficiaries, or changes in the trustee.
4. Professional Assistance: Creating a Living Revocable Trust with an Incapacity Clause can be a complex process that requires legal and financial expertise. Working with an experienced estate planning attorney who can help navigate the legal and financial considerations is essential.
A Living Revocable Trust with an Incapacity Clause is a powerful estate planning tool that can provide individuals with peace of mind and ensure their assets are protected and distributed according to their wishes. By including an incapacity clause in the trust, individuals can ensure that their financial and medical decisions are handled by a trusted individual, avoiding the need for costly and public court-appointed guardianship. When creating a Living Revocable Trust with an Incapacity Clause, working with an experienced estate planning attorney and carefully considering the trustee, funding, updates, and other legal and financial considerations is essential. With the right planning and assistance, a Living Revocable Trust with an Incapacity Clause can help protect your assets and wishes for future generations.