What Is A Revocable Trust?
Estate Planning Attorneys in Chattanooga, TN
When most people think about the term “estate” the mind conjures up images of an extensive manor home, perhaps a mansion, and its property. It would be fair to say that the common belief is that if a person has an estate then that person is wealthy. In the legal arena the word estate typically means the whole of one’s possessions – all of the property and debts of a person or a family. In other words, if you own anything of value, then you have an estate. It may not be extremely valuable, but it is an estate nonetheless. In this perspective your estate includes personal property and real property. If you have an estate then you should have a plan of how to deal with and manage your estate given certain life events, such as incapacity or death. Or perhaps provision for a disabled child. A Revocable Trust provides estate management solutions for all of these issues.
What Should Happen With Your Assets When..
Now most people think, at least a little, about who should inherit their property upon death. Typically it is your surviving spouse and/or children that you desire to have your property after your death. This of course is not always the case, some people are not married, and have no children, but have other relatives or charities that would be the beneficiaries of an estate.
However, a question that is not commonly thought about, let alone answered, is: Who should manage my estate when I’m still living but unable to carry on my own financial affairs? This is an important issue to consider. If you become incapacitated, mentally or physically, or are just plain unable to manage your own financial decisions, and manage your assets, then it would be a great relief to have someone that you choose to take over and manage these matters for you. This should of course be someone you know and trust, and this person should manage your assets for your benefit. Now at this point you may be thinking – well of course my child would do this. But does your child have the legal authority to do so, the tools available and necessary instructions to manage the estate? Probably not.
Estate Planning Attorney – Legal Means to Accomplish your Goals
This is where an estate planning attorney comes into the picture. An attorney who is experienced in estate planning will help you make the right decisions about who, what, when, where and how in terms of your estate. These decisions are not always easy to make alone, and there are usually issues that a non professional will not think about or be able to resolve. Estate planning involves open and frank discussions about your needs and desires regarding your financial affairs then a plan can be formulated that will meet your goals and cover the contingencies. Ensuring that in the event of an incapacity that your estate will be managed for your benefit – or for the benefit of you and your spouse. Then providing for distribution or disposition of your assets upon your death – or the death of both you and your spouse. An estate plan also must be able to care for other issues like a disabled child, perhaps an errant child or other family issues that could cause a wasting of or otherwise threaten the future of the assets of your estate.
A Revocable Trust Agreement Provides the Best Management of Your Estate
A Last Will and Testament is an authenticated legal document which is in essence your declaration regarding your desires for post death distribution of your estate. A Will usually must be probated and does nothing to help manage your estate during your lifetime. A Revocable Trust, sometimes called a Living Trust is a written agreement, a contract, between you and any other party who places property into the trust or has a management role in the Trust Estate. Because a Trust Agreement is a contract it does not require probate or any other form of court supervision, the ters of the contract are followed by the parties. If there happens to be a non-performance of a duty or obligation under the terms of the Trust, then the Trust Agreement would be enforced by the courts like any other contract.
A Trust allows for the provision of estate management during lifetime and after death. Unlike a Will, a Trust is extremely flexible and can be utilized to care for even the most complex of issues. Perhaps you have a disabled child, but other children who are not disabled. For example – you want to distribute a share of the estate to the non-disabled children, but keep a share for the disabled child. A trust agreement can provide for this situation and be written to remain in effect until you, your spouse, and your disabled child are all deceased, then distribute any remainder to the surviving children – or other persons. Because it is a written contract, you can include many provisions, tailor it to your needs, and provide for multiple contingencies. Be sure to discuss all of these issues and concerns with an estate planning attorney.
The Trust Holds Ownership and Beneficial Interests in Property and Investments
You may ask – how does a Trust manage an estate? When a Living Trust is created you place the ownership interest or real property, bank accounts, and certain other assets into the Trust. The Trust actually becomes the owner of the assets. More specifically the Trustee holds the title or ownership of the property in trust for the benefit of the persons designated in the Trust agreement. The trust also holds the beneficial interest of certain assets, like IRS accounts, life insurance policies, etc. Any proceeds from beneficial assets will pour into the Revocable Trust and be used for the benefit of the beneficiaries of the Trust Agreement. All assets held in Trust must be managed and distributed according to the terms of the Trust agreement, and this is enforced by law.
A Living Trust is Revocable and Amendable
Typically a Living Trust is revocable – able to be cancelled – and amendable – able to be changed– by you and/or any other person placing property in the Trust. This is an important feature of a Trust. Because it allows you to change your estate plan according to changes in circumstances. However, the ability to revoke or amend the trust usually terminates upon mental incapacity or death. Whichever event occurs first. At such point the trust becomes irrevocable and unchangeable.
The Parties Involved in Setting Up A Trust and Managing the Trust Estate
Written agreements or contracts involve one or more persons or entities who are parties to the contract and knowingly and willingly agree to the terms and provisions contained within the written instrument. A Revocable Trust Agreement is no different. A person or persons who creates a Revocable Trust and places property into the Trust are the Settlors of the Trust. Sometimes also referred to as Grantors. The trust manages the Settlors’ property and assets.
The person, persons or entity that manages the Trust is called the Trustee
Trust Agreement Dictates the Terms
The Trust Agreement itself assigns authority and defines the responsibilities of the Trustee. Typically in an individual Trust you will serve as your own Trustee, in a Family Trust you and your spouse will serve as Trustees. In most situations you will want to appoint a Successor-Trustee who will take over the management role as the Trustee upon incapacity, resignation for other reasons or death of the original Trustee(s). Again, because a Living Revocable Trust can be tailored to your needs and desires you can appoint one Successor-Trustee or have Co-Successor Trustees (two or more persons acting together) . These are issues that should be carefully examined with your estate planning lawyer.
Other Parties to a Trust Agreement
More than Settlors and Trustees are involved in a Living Trust. Now that you have placed property and beneficial interests into the Trust, there needs to be a designation of who benefits from these assets, and how. Those who benefit are called a Beneficiary. If it is your own individual Trust you are the Primary Beneficiary
in a family Trust it is you and your spouse. The Trust is for the benefit of Primary Beneficiaries first and foremost until death. After the death of all Primary Beneficiaries then there are Secondary Beneficiaries
– usually your children- who either benefit from the continuance of the Trust or receive a distribution of assets from the Trust.
Discover How a Revocable Trust can Help You – Speak to An Estate Planning Attorney
Now before you form an opinion about the need for creating a Living Revocable Trust, thinking perhaps that this is for wealthy people. For this reason, you should consult with an experienced estate planning attorney. Anyone who owns real property or has other assets benefits from a living trust. In Chattanooga, Tennessee, Attorney Jim Purple Purple Law Firm can help you to create and establish a revocable trust. A complete estate planning package. As a lawyer, Jim Purple has been planning estates for regular people since 1982. Whether your estate is a small estate or a million dollar+ estate contact the attorneys of Purple Law Firm in Chattanooga, TN. Our team of experienced lawyers now what Trust centered estate planning is all about.