I almost always design my clients’ estate plans around revocable living trusts. As talented Florida lawyer Merrell Bailey has written, living trusts are designed to be the friendly, flexible “minivans” of trusts, carrying you, your loved ones, and your assets along the road of life.
When you establish a living trust, you remain in full control of all of your property. You may amend or revoke a living trust at any time, for as long as you are alive and competent. Your living trust becomes irrevocable upon your death, and then protects what you leave your beneficiaries from creditors and predators.
In Virginia, a living trust is the best way to name a person (your “Successor Trustee”) to help you with your finances, property management, and paperwork if you can no longer handle them yourself. In most cases, your living trust is much better suited for that purpose than a Durable Power of Attorney would be.
Moreover, your living trust means your loved ones can avoid having to administer your estate in probate. Virginia probate is a Circuit Court proceeding that appoints an Executor who inventories all of your assets after your death. The Executor then transfers title of your assets to to your creditors and heirs. But the Executor must report in detail to the court – as he or she goes along – where every penny (literally) of your assets has gone. If you have ever served as an Executor — perhaps because a friend or family member died without having established a trust — you know firsthand that probate administration is not a job you should foist lightly on someone you know and love.
In place of probate, the property in a living trust is transferred smoothly (technically, instantly at the moment of your death) into the hands of your Successor Trustee, who manages it for, and transfers it to, your heirs and other named beneficiaries as you instruct in your trust documents. Your Successor Trustee does not have to account to any court, but only to such people as you might specify. Plus, your estate avoids Virginia state probate taxes and city or county probate taxes, which are levied on estate assets (but not on living trust assets) at rates between .1% and .133%.
With a living trust, you and your family are in control. With probate, a state court is in control. Which sounds better to you?
And there’s more!
Read on to learn how a living trust with spendthrift trust provisions will help preserve and protect your hard-earned wealth for your surviving spouse and your descendants.