The trust is an enormously flexible vehicle for all kinds of legal strategies. In the typical “revocable living trust,” the settlor (one who makes a trust) appoints himself as trustee until his death or disability. Then a successor manages and uses the trust property until the successor’s death, at which point the remainder is distributed to the settlor’s successor beneficiaries.
Some non-tax benefits include:
• Avoiding delays and expenses due to assets be probated
• Managing assets professionally
• Permitting distribution over a long period
• Minimizing the risk of multiple inheritance taxes
• Avoiding publicity
• Avoiding guardianship
• Reducing the likelihood of will contests
• Restricting the wasting of assets by spendthrift beneficiaries and their creditors.
Many people prepare elaborate living trusts, but never fund the trust by putting the appropriate assets into the name of the trustee, and therefore do not implement what was intended. Further, if avoiding probate is your main goal, sometimes you can succeed with simpler and less expensive methods than a living trust. As always, thoughtful planning and the advice of a knowledgeable Elder Law Attorney can avoid pitfalls such as this.
Trusts are commonly used to avoid probate. However without a small probate to notify and clear creditors, the trustee remains personally liable far a significant period of time to creditors of the estate.