In the past several decades trusts have become an increasingly popular addition to a comprehensive estate plan. A trust offers a wide variety of potential estate planning benefits such as tax avoidance, probate avoidance, and asset protection. If you choose to create a living trust you will need to appoint a trustee for your trust. Many people choose to appoint themselves as the trustee of their living trust.
A trust can be a testamentary trust or an inter vivos trust, commonly referred to as a living trust. A testamentary trust is one that does not take effect until the death of the settlor, or person who created the trust. A living trust, on the other hand, takes effect once all of the formalities of creation are complete and a mechanism for funding the trust is in place. A living trust may also be revocable or irrevocable. A revocable trust may be modified or revoked by the settlor at any time and for any reason. An irrevocable trust, as the name implies, cannot be modified or revoked ever once it becomes effective.
People often create a revocable living trust as part of an incapacity plan because of the ability to name yourself as the trustee of the trust. The way it works is that you create a revocable living trust and transfer significant assets into the trust. You then name yourself as trustee and your spouse/parent/adult child as the successor trustee. In the event of your sudden incapacity your successor trustee will take over as a matter of law. Your successor trustee then has immediate access and control over all trust assets. This alleviates the need for a loved one to obtain a court order allowing access or control over assets in the event of a sudden incapacity. If you never become incapacitated you still have access and control over the trust assets yourself as well as the ability to revoke or modify the trust at any time.
While many settlors name themselves as the trustee of a living trust you have the option of naming someone else as trustee. You may name another family member, an attorney, or a professional trustee if you choose to do so. If you decide to create a living trust be sure to consult with your estate planning attorney about your choice of trustee.
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