When Should I Actually Create A Living Trust?
A living trust must be created before you need it, and since we don’t know when someone is going to need it, we advise that you do it as soon as possible. During COVID 19, our abilities are a little restricted because we’re only allowed to have face to face meetings for essential tasks. However, our first meeting or two will be virtual, either by phone or by zoom. The first meeting will be the one when we gather essential information, and the second meeting will be used to answer any questions the client may have after reviewing the documents. When it’s time to sign, we can have a meeting in person, so that the notary can be present and execute all the documents in our office.
Is It Ever Too Late To Set Up A Living Trust?
Yes, it can be. It’s too late once the client has lost capacity, which can happen for a number of reasons. A client may lose physical capacity due to an accident or an illness, or mental capacity due to declining mental ability with any form of dementia. Once this occurs, it’s too late for the client to do anything for themselves, and in order to help them and to make decisions for them, we would have to go to court and go through the process of a conservatorship, which can be costly and time-consuming.
Is It Ever Too Early To Set Up A Living Trust? Should I Wait Until I Have More Assets?
It is sometimes is too early to set up a living trust, but I always advise that we set up other documents, even if a trust is not the appropriate thing. Once a person becomes an adult, they should have a power of attorney in place and advance health care directive, so that if they become incapacitated, someone can make financial and medical decisions for them. Therefore, if the time comes when it’s appropriate to have a more robust estate plan like a trust or a will, we can do so.
Can I Add Additional Assets To My Living Trust At Any Point In Time?
Absolutely. The trust is not written with the assets listed in it. So the important thing is that as you acquire new assets, you list the trust as the owner of those assets. As time goes on, you can add assets to the trust simply by naming the trust as the owner without making any changes to the trust documents.
Can I Remove My Property From My Trust At Any Time?
Yes, you can. The same way that one would dispose of property without a trust, you can dispose of the property with the trust. You can sell, gift, or trade it. The important thing to remember is that, when these things are done, you need to execute the documents and complete the transaction as the trustee of the trust, rather than as an individual. As long as you execute all the documents as a trustee, you can effectively remove the assets from the trust.
Can I Put My Savings Or Other Bank Accounts In My Living Trust?
Yes, you can, and I advise that you do. Assets can be transferred at death through a beneficiary designation. However, a beneficiary designation doesn’t do you any good if you became incapacitated and you only had someone named as a beneficiary on your account, as they have no right to get to that account to use those assets for your benefit during your lifetime. They only have a right to those assets after you die. If you put the assets in a trust now, when you become incapacitated, your successor trustee will have the authority to access those assets for your benefit during your lifetime. With this ability, they can pay your bills, manage those assets, invest them, and more, without putting those assets at risk from their own financial liabilities.
Will I Need To Adjust My Trust As Funds Grow Or If I Get New Accounts Or Property?
No, the trust itself doesn’t change. You simply put the assets under the name of the trust and those assets become part of the trust. The only time we would need to change the trust during the addition of assets would be if you want to assign a specific beneficiary for that asset.
I’m Worried About Creditors. Is Now A Good Time To Put My Assets And Bank Accounts In A Living Trust? Will They Be Protected?
It’s a common misunderstanding that a revocable trust will protect your assets from creditors. In fact, it does not. It is simply done to protect your estate from having to go through legal processes if you become incapacitated or if you die. If your concern is about creditors, then there are other things that that can be done. Typically, it is very difficult to protect assets from creditors, and this is intentional. We don’t want people to simply be able to sign a couple of papers to avoid paying their bills. The government wants people to be responsible for their debts, so it is very difficult for people to avoid their creditors. Placing assets in a trust in order to avoid creditors can be deemed a fraudulent transfer, and there are some serious penalties for it. If your concern is for some future liability due to a lawsuit for some negligent act such as a car accident or somebody slipping and falling at your place of business or at your home, the best way to protect from that is to have adequate insurance. Insurance is a great way to protect your assets because not only does it protect you, but it also sets up a method by which the injured party can be paid, and it doesn’t take away a person’s right to be compensated for their injury.
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