Revocable Living Trusts: Important Tools During the Pandemic
Americans reacting to the spread of the Novel Coronavirus (COVID-19) should ensure that their plan includes proper resources and estate planning documents to protect themselves and their family financially. One important tool during this unprecedented time is a Revocable Living Trust.
What is a Revocable Living Trust?
A Revocable Living Trust is a flexible and common estate planning tool. The Revocable Living Trust is a written agreement that appoints a trustee to manage property owned by the trust. Generally, most people are Trustees of their own trusts during their lifetimes. The trust also appoints successor trustees who may step in if the original trustees become incapacitated or pass away. Trusts are intended to avoid the probate court altogether, but there are other important benefits of trusts that help families plan for the future, including the aftermath of the coronavirus pandemic of 2020.
After a trust is created and signed, the trust creators connect certain property to the trust. The assets that need to be connected to the trust are those that have legal title. Common assets that have legal titles are real property, bank accounts, and certain investment accounts. Once those assets are connected to the trust, the trustees and successor trustees can manage the trust assets with no pushback from banks or other financial institutions.
What Happens If You Don’t Have a Revocable Living Trust?In comparison, for individuals who have not established a Revocable Living Trust, a financial power of attorney becomes the sole document to plan for a period of incapacity or disability. A financial durable power of attorney grants an agent the ability to step into your shoes if you cannot act. Unfortunately, national banking regulations were amended in the early 2000s and affect the way financial powers of attorney are treated and accepted by banks and other financial institutions.
Financial powers of attorney need to be revisited every few years. Financial institutions often won’t accept financial powers of attorney that are more than three to five years old or out-of-state. Additionally, the power of attorney ends with the death of the person who creates it.
Avoid Power of Attorney Issues: Establish a Revocable Living Trust
With a Revocable Living Trust, you avoid bank pushback on power of attorney. Bank accounts are transferred into the trust after the trust is signed. Once the bank accounts are properly connected to the trust, a Certification of Trust is used to prove who the current trustee is. The trustee has continuing authority in the event of death and will not be frozen out of the account.
How Can Collier Law Help?
Setting up a Revocable Living Trust will help you protect your finances and your loved ones during the Coronavirus pandemic as well as during any period of incapacity or disability in the future. Call an experienced estate planning attorney at Collier Law today.