The Care Of The Incapacitated Adult: Part 2

A revocable living trust is a document created during the grantor's lifetime, and is effective upon execution.

Here's how it works:

The grantor, who is also the trustee, changes the title on all of his appropriate property by making the revocable living trust the holder of the legal title to the property. Since the trust is revocable, it can be amended, changed, or dissolved, at any time, according to the grantor's wishes. There can also be a co-trustee in this type of trust. The trust is allowed to buy, sell and hold assets and distribute income and principal to the Grantor. In most cases, the grantor and his or her spouse are the sole lifetime beneficiaries. The grantor continues to manage his financial affairs and the property, just as he has done in the past, but now he is acting as trustee of the revocable living trust.

At the grantor's death, the trustee distributes the property, and the assets avoid going through probate, which will save time and money. If however, the trust is not funded, (via asset transfer), then probate may not be avoided.

The trust can provide for a successor trustee, whose role is to carry out the terms of the trust after the grantor's death. Usually, the successor trustee takes over, after the surviving spouse dies, but can also act earlier, if desired. The successor trustee could be the spouse, an adult child, another relative, a trusted friend, or corporate trustee.

Some of the advantages to a revocable living trust are:

1-Privacy-since there is no public disclosure, the estate details are private,

2-Flexibility-since the trust is revocable, changes are easy to make,

3-Freedom from any court appearances and accountings. Trusts are rarely challenged in court, and are rarely overturned.

Some of the disadvantages to a revocable living trust are:

1-It is more costly to set up a trust with the average being approximately $1,000,

2-Since the trust is private, it is an unsupervised arrangement, and has a greater potential for fraud and mismanagement by the successor trustee,

3-All titled property, such as real estate, autos, etc, needs to have the changes in title filed with the appropriate company or agency. In most cases, there is little or no cost involved in changing titles, it does however, take time to complete and file the paperwork.

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