For over a quarter of a century, the National Safety Council has recognized June as National Safety Month. An objective of National Safety Month is to raise public awareness of the top safety and health risks in the United States. One of the lesser-known but considerable risks Americans and their loved ones face are the financial and emotional repercussions that can accompany incapacity or death. A revocable living trust is a legal tool that can keep clients and their loved ones safe from the costs, uncertainty, and confusion that may result upon a client\u2019s incapacity or death.
A Revocable Living Trust Protects the Client<\/b>
Like every person, a client is at constant risk of suffering a disastrous accident or illness that may render them incapable of caring for themselves or their loved ones. Their incapacity could be temporary, or it could last until their eventual death. The total cost of incapacity, which may include lost wages and the cost of required medical care (if a client\u2019s incapacity requires assistance with the activities of daily living such as bathing, eating or dressing), is difficult to calculate. However, it can quickly become very costly: the average cost of assisted living in the United States in 2020 was $4,300 per month.[1]
A revocable living trust protects clients by providing instructions for how they and their loved ones are to be financially supported during the client\u2019s incapacity. A revocable living trust also allows clients to choose who will handle their finances when they are unable to handle them themselves. Further, there is no better time than now to put a revocable living trust in place because the trust is revocable, which means that clients can change their mind at any time and alter their trust as their life circumstances change, as long as they have mental capacity.
A Revocable Living Trust Protects the Client\u2019s Loved Ones<\/b>
A revocable living trust also protects a client\u2019s loved ones. It provides specific instructions for what clients want to have happen upon their incapacity or death, which means that their loved ones will not be left guessing what they would have wanted, or worse, have to look to state law to determine who should be given the authority to handle their financial and end-of-life affairs.
Estate administration fees vary widely by state, but they too can be very costly. In California, for example, where probate attorney and executor fees are set by law, the attorney and executor fees to probate a home worth $800,000 could be as much as $38,000. [2] A revocable living trust, however, can avoid probate and the associated probate fees.
Another benefit of revocable living trusts is that they can remain private. Without the instructions contained in a revocable living trust, family members are often forced to resort to public court processes, which means that the court and other nosy individuals may be prying into the client\u2019s very private matters.
Further, a revocable living trust can provide basic marital deduction planning to maximize the use of the client\u2019s and their spouse\u2019s estate tax exemptions so that their loved ones do not face a large estate tax burden after their death. Finally, using a revocable living trust allows the client to protect the money they leave to their loved ones from their beneficiary\u2019s creditors.
A Revocable Living Trust Must Be Properly Funded to Work<\/b>
In order for a revocable living trust to work, it must be properly funded, which means that the client\u2019s property must be owned by the trust, or for certain types of property, the trust must be named as the beneficiary. If the revocable living trust is not properly funded, then a probate may be needed. Advisors play an important role in ensuring that the appropriate accounts are owned by the trust or that the beneficiary designations name the trust.
Because the instructions contained in a revocable living trust are so vital, it is important that they are reviewed periodically. Check in with clients to ensure that they have reviewed their document within the last year and that it still reflects their wishes and their situation. If changes are needed, make sure they contact their estate planning attorney, who can help update their revocable living trust so that it works for them and their loved ones during incapacity and at their death.
If you or your clients need any assistance with creating or updating a revocable living trust, please contact us, as we are happy to help.<\/p>\n
<\/p>\n
<\/p>\n
[1] What Is \u201cAssisted Living\u201d and How Much Should It Cost?, AssistedLiving.org, https:\/\/www.assistedliving.org\/cost-of-assisted-living\/#an_overview_of_assisted_living (last visited May 24, 2022).<\/p>\n<\/div>\n
[2] California Probate Fees 2020, Velasco Law Group Blog (Feb. 14, 2020), https:\/\/www.velascolawgroup.com\/california-probate-attorneys-fees-and-court-costs\/#:~:text=Statutory%20probate%20fees%20under%20%C2%A7,2%25%20of%20the%20next%20%24800%2C000.<\/p>\n<\/div>\n
<\/p>\n","protected":false},"featured_media":0,"template":"","newsletter_categories":[6],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/lawtonlegacyplanning.com\/wp-json\/wp\/v2\/newsletters\/1932"}],"collection":[{"href":"https:\/\/lawtonlegacyplanning.com\/wp-json\/wp\/v2\/newsletters"}],"about":[{"href":"https:\/\/lawtonlegacyplanning.com\/wp-json\/wp\/v2\/types\/newsletters"}],"wp:attachment":[{"href":"https:\/\/lawtonlegacyplanning.com\/wp-json\/wp\/v2\/media?parent=1932"}],"wp:term":[{"taxonomy":"newsletter_categories","embeddable":true,"href":"https:\/\/lawtonlegacyplanning.com\/wp-json\/wp\/v2\/newsletter_categories?post=1932"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}