Many folks have a revocable living trust to avoid probate. When a person dies with assets in his or her name those assets normally go through a legal proceeding called probate. Probate is expensive, time consuming and public in nature. A trust used to avoid is called a Death Plan. A Life Plan, on the other hand, is designed with protecting you first while still avoiding probate.
A Death Plan is the typical type of estate plan prepared by Las Vegas living trusts attorneys that includes a revocable living trust and a last will and testament. Once the living trust is established the assets such as the home and bank accounts are transferred to the trust. When you die, the trust instructs the trustee to marshal the assets together, pay off creditors and then follow the instructions to distribute the assets to the beneficiaries chosen by you. If the assets are not in the trust upon your death, the will instructs the court to give those assets to your trust whereupon they are then given to the trust beneficiaries.
While it is important to avoid probate for your family, dying is not your problem. It is estimated that you are six times more likely to become incapacitated this year than to die. The desperate calls to my office are not that your husband has died, but that he has lost his mind. Living trusts were not designed to address this problem; therefore, they provide only cursory provisions that offer outdated protection. Life Plans provide answers to the following questions.
1. If you are married, will the children’s inheritance be lost because your spouse remarries when you die?
2. How can we determine incapacity without going to court, without violating HIPAA and, if you’re married, without your incapacitated spouse declaring you incompetent first?
3. How do we avoid conflicts of interest between your trustee and the beneficiaries and their creditors claiming your assets while you are incapacitated?
4. How do we protect the beneficiaries while they are alive from losing the inheritance in a divorce or lawsuit?
5. When the laws change, how do we protect the assets from changes in the law that you didn’t know about?
6. When you are in the emergency room or traveling, how do we get the health care documents to the hospital when the documents are at home?
7. How do we stop your son-in-law from taking your grandchildren’s inheritance when your daughter dies?
8. How do we avoid joint-ownership with your kids when you are single and elderly?
Avoiding probate for your family is noble. But don’t forget to protect you and your beneficiaries during life.
Thanks to our friends and contributors from The Law Offices of Gary L. Fales & Associates for their insight into the difference between a death plan and a life plan.