A very common concern that many of our clients have when planning their estates is that they want the process to be simple for their loved ones when they are gone. In addition, together with this concern, our clients usually want to reduce costs and attorney fees. Finally, many of our clients will also have concerns about their heirs squandering their inheritance.
When we hear our clients mention these types of concerns, we will almost always discuss setting up a revocable living trust. When a person dies owning property in their name in Tennessee, their surviving family members will be required to start a probate proceeding with the court to have the assets transferred to the surviving family members. These probate proceedings are expensive, public, and can last anywhere from six months to two years or longer.
However, the probate process can be completely avoided for your family by establishing a revocable living trust. This type of estate planning tool is considered to be a completely separate entity. Therefore, when you establish the revocable living trust, and properly fund the trust by transferring all of your assets into the name of the trust before you die, then your surviving family members can completely avoid probate and will immediately maintain access to all of your assets, real estate, and financial accounts after you die. Therefore, by establishing a revocable living trust, not only would you prevent a public and time consuming probate process for your family, but your family would also avoid costs and attorney fees that would be required when your family goes through the probate process after you are gone.
In addition, a revocable living trust can also be used to prevent your heirs from squandering their inheritance. For example, a concern that we will sometimes receive from our clients is that their adult child is great and they do love their adult child, but the parents are concerned regarding how he or she has shown to be irresponsible with money. The parents may express a concern regarding credit card debt and spending habits. Well, a revocable living trust can also be used to prevent your children from squandering their inheritance.
One such way that this can be accomplished is by using the appropriate language in the trust document providing for staggered inheritance over the course of a number of years. For example, the trust document could provide that x percentage of son’s inheritance shall be distributed at age 18 to be used solely for education and welfare, x percentage at age 25, x percentage at age 30, and the remaining at age 35. Therefore, not only would this provide your heirs with protection from squandering and spending away his or her inheritance, but this type of trust language could also be used to protect your children’s inheritance from creditors, certain types of lawsuits, and even a claim by a spouse in divorce.
As you can see, revocable living trusts can be a very important estate planning tool to protect your assets for your children, avoid probate, avoid unnecessary costs and attorneys fees, and even protect your children’s inheritance from their own spending habits.