how plan estate bivens & associates scottsdaleRevocable Trusts (also known as Living Trusts) are the gold standard in estate planning. Now, with the concerns of COVID-19, Revocable Trusts are getting much deserved attention and are being used with greater frequency. In a typical Revocable Trust, the creator of the trust (i.e., the trustor, aka grantor) is also the beneficiary and trustee during his or her lifetime. This allows the grantor unfettered access and control over the assets that are transferred into the trust during the grantor’s lifetime. In short, financial life with a Trust is no different than without a Trust for the grantor. At the grantor’s death, the successor Trustee will take over and administer the trust estate to marshal assets, pay debts, and distribute the trust assets to the beneficiaries, pursuant to the terms of the Trust.

Regardless of the size of your estate, there are advantages to the use of a Trust as part of an estate plan over the combination of just a durable power of attorney and Will.  During the coronavirus pandemic, with courts being limited to only emergency filings, stock market volatility and businesses on pause, the use of Revocable Trusts can provide even greater benefits.

Immediate Access to Assets Upon Trustor’s Incapacity

If the grantor was ever unable to manage the trust assets due to any reason (e.g., serious illness, injury, or advanced age-related conditions), it is a simple and quick process for the designated successor Trustee to assume authority. The successor Trustee will then continue to manage and use the trust assets for the benefit of the trustor during his or her incapacity. In today’s world, financial institutions and title companies prefer to work with a successor Trustee, rather than an Agent under financial power of attorney and will more readily honor the trust legal document.

Protection Against Financial Exploitation

With a Trust, the acting Trustee has sole access to trust assets. In the event the trustor were to ever suffer from cognitive impairment (e.g., Alzheimer’s disease, dementia, or brain injury) and unknowingly mismanage his or her  own assets or become vulnerable to financial exploitation, the successor Trustee could step-up and protect the trust assets against these risks. Note, with a financial power of attorney both parties (the Agent and the owner) have access to the assets and accounts of the owner, leaving them at risk. In such instances, a Trust is helpful to avoid court intervention, known as a Conservatorship, to protect an incapacitated or vulnerable adult.

Immediate Access to Assets upon Trustor’s death- No Probate

Upon the Trustor’s death, the successor Trustee (designated by the Trustor in the Trust document) will be able to quickly gain control and access over all trust assets. By contrast, formal probate (i.e., the determination by a court as to the validity of a Will and appointment of the Personal Representative) can be a lengthy process causing delays in gaining access to the decedent’s assets. In many instances, immediate access to an individual’s assets at his or her death is essential. If a Revocable Trust has been funded, such assets can be used immediately to help pay for expenses (such as funeral expenses or medical bills), while also providing immediate control over (a) brokerage accounts with fluctuating assets due to market volatility allowing beneficiaries to adjust investments, and (b) businesses that may be subject to constantly changing governmental orders.

Reduced Administrative Costs- No Probate

In addition to delay in gaining access to assets after someone’s death, once probate has been opened it can also be a time-consuming, more costly and arduous process. A Revocable Trust, if fully funded, will avoid the probate process and its related costs since all assets will pass pursuant to the terms of the trust. If there are no assets in an individual’s name at his or her death, such individual completely eliminates the need to probate a Will. This can be even more important for individuals with assets in more than one state. With a Will, each state would generally require an ancillary probate proceeding to allow for the transfer of that state’s assets. By funding a Revocable Trust, the need for such ancillary probate proceedings would also be eliminated.

Privacy

Revocable Trusts also provide a level of privacy over the disposition of assets. Probate is a public process. When a Will is offered to the court for probate, the Will becomes part of the public record, allowing others to access the Will and ascertain how and to whom assets will be distributed. A Revocable Trust that governs the disposition of an individual’s estate would not allow public to access to this information.

Achieving Goals

The COVID-19 crisis has highlighted the utility of Revocable Trusts as part of an individual’s estate plan. You should consider using a Revocable Trust if your estate planning goals include any of the following:

  1. To make things as easy as possible for those whom you have designated to manage your financial matters in the event of your incapacity;
  2. To protect your assets in the event you were ever vulnerable to exploitation due to cognitive or other impairment;
  3. To make things as easy as possible for those whom you have designated to administer your estate after your death;
  4. To reduce legal fees and costs in estate administration;
  5. To avoid delays in estate administration; or
  6. To keep things private.

CALL US AT 480-922-1010 OR EMAIL INFO@BIVENSLAW.COM TO SCHEDULE A COMPLIMENTARY ESTATE PLANNING CONSULTATION BY PHONE OR VIDEOCONFERENCE WITH ONE OF OUR ATTORNEYS.

JUST LIKE YOUR VEHICLE, ESTATE PLANS REQUIRE REGULAR MAINTENANCE.  IF YOUR EXISTING ESTATE PLAN HAS NOT BEEN REVIEWED BY AN EXPERIENCED ESTATE PLANNING ATTORNEY IN THE LAST 3 YEARS OR WAS PREPARED OUT-OF-STATE, NOW MAY BE THE PERFECT TIME FOR A CHECK-UP.

 WE ARE HERE TO HELP. WE UNDERSTAND THE IMPORTANCE OF THESE LEGAL DOCUMENTS; WE ARE WORKING REMOTELY AND WILL MAKE SPECIAL ARRANGEMENTS FOR ESTATE PLAN SIGNINGS DURING THIS COVID-19 PANDEMIC.

-Stephanie A. Bivens, Esq., CELA (Certified Elder Law Attorney by National Elder Law Foundation)