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In my previous blog a living trust was defined as a written document in which assets are placed in a trust for the benefit of an individual during his or her lifetime.  Generally speaking, this type of trust is created for the grantor’s own benefit while alive.  He or she becomes not only the beneficiary but also the trustee, keeping complete control over the assets. In this blog I will discuss the main benefits of a revocable living trust and why you might want to consider one as part of your estate plan:

Avoiding Probate

Probate is the legal process where it’s determined if your will is valid. The process can be long and tedious. It involves going through all of your assets, notifying creditors, paying debts and taxes (you can’t even avoid those in death!). In Pennsylvania, even relatively modest estates can take 3-6 months and more complex ones can take years to probate. Your beneficiaries also don’t have access to their inheritance until probate is finished. It’s also expensive to probate your assets – lawyers, accountants, appraisers and executors can all charge fees for their services related to probate. These costs are paid from the estate, which cuts away at the value passed on to your beneficiaries. And lastly, probate is very public. Once an estate goes to probate, all of the documents including your Will, become public record filed with the court. So, by putting assets in a living trust, you can have a more private, efficient and timely transfer of assets to your beneficiaries at your death.

Incapacitation

In the event you become ill or incapacitated, either physically or cognitively, the person you have chosen (maybe a family member, trusted friend or attorney) to serve as your successor trustee can step in to manage your financial affairs without court approval. But please note, since the trust is revocable, you can dispute whether or not you are incapacitated at any time and retain control of your assets

Peace of Mind

A revocable living trust is the cornerstone of many estate plans.  Knowing that in the event of your incapacitation your financial affairs will be handled in the way you wish and that upon your death, the assets of the trust can be made immediately available to your loved ones will certainly provide peace of mind to many of you.

If you have any questions regarding trusts, please call me, John McCarthy, CFP® at 570.826.1801 ext. 309, or call your current Wealth Advisor at Jacobi Capital Management.