A Living Trust is a powerful tool can help your estate avoid probate court (saving time, money and anguish) and how it can provide divorce protection for your children.
Another way a Living Trust can protect you is in the event that you are no longer physically or mentally capable of handling your own affairs.
What are the chances this will happen? Nobody knows. Life brings unexpected changes (i.e., car accidents, diseases and other crises). But if you take time to plan for these potential events, you can avoid the inevitable stress and problems that accompany being declared legally incapacitated.
Do Something
There are serious consequences that arise from having made no arrangements for such a situation.
If you own property in your name and you become incapacitated, a court will set up a guardianship. The guardian will be named by the court, not you. Many guardians draw a fee for their services from your estate. Family members might vie for this position, possibly creating discord amongst them.
Any contact that the court-appointed guardian has with the court creates additional expenses, which further siphons away your resources. Guardians must file annual accountings and reports with the court, requiring even more additional expenses.
Judicial proceedings are also generally a matter of public record, and your family might be forced to air it’s dirty laundry publicly.
Living Trusts Save Money
Those extra legal fees can be avoided if you create a Living Trust that names someone specifically to assume the role of Successor Trustee in the event of your incapacity.
Through a Living Trust, you can avoid having a court-appointed guardian oversee your assets, it stops the unnecessary depletion of your estate by legal fees, and you decide how much to compensate your Successor Trustee.
Create Power of Attorney Documents
When drafting a Living Trust, I advise clients to also create a Durable Financial Power of Attorney and a Health Care Power of Attorney. The same person can be selected by you to hold all three positions, or you can choose different people to hold each of these powers.
Court appointed guardians do not have the broader powers of administration that are granted by law to Successor Trustees. By planning ahead, you can name a trusted person to handle your affairs and be assured that your wishes will be carried out and your best interests protected. A Living Trust allows the Successor Trustee to assume the administration of the trust when you become incapacitated, avoiding a costly guardianship and a lot of family distress.