There may come a time when a loved one can no longer make financial decisions because of a mental or physical disability. I have written so many times before how important it is to have the proper legal documents in place to ensure that you or a loved one’s wishes are followed even when one cannot speak for themself. Having a durable power of attorney and or/ standby-trust in place now will assure you that there will be someone in place to make financial decisions.
A Stand-by Living Trust offers a person a plan for the future, for dealing with the unexpected. A plan for financial security for you or a loved one, a plan that will provide you with the peace of mind that comes with having a secure plan in place for financial management when you cannot!
I am often asked questions about the use of a living trust. Here are a few of the more common questions:
1. Is it difficult to set up a trust?
No. You start by discussing your financial concerns and investment goals with your trusted advisor, a trust officer or other wealth management professional along with your attorney, who will prepare the trust agreement.
2. What does the agreement say?
Generally, the agreement defines that you, as grantor (creator) of the trust, are transferring assets to a legal entity (the trust) to be administered by a named trustee. The stand-by trust agreement will define under what circumstances the trust is to be funded. When funded, the trust agreement will describe how the income from the trust will be used and how the trust assets will be ultimately distributed.
3. Do I give up permanent control of my assets when I set up a living trust?
Absolutely not. The benefit of a living trust is that it’s revocable so long as you have the mental capacity to make changes. You are able to make changes to your trust agreement as family, economic or investment circumstances dictate.
4. Who makes the investment decisions with regard to the assets in the trust?
Should you decide to fund the trust when you still are capable of making decisions you will look to the trustee for objective, unbiased portfolio supervision. You may spell out your goals and requirements in your trust agreement and leave the specific investment decisions to the trustee. Should you become incapacitated after the funding of the trust the trustee will continue to follow the instructions in your trust.
5. Who should I choose as trustee?
Your trustee should have financial experience, investment management capabilities, reliability and responsiveness to meet your needs when called upon to serve. Oftentimes, the best choice for a trustee are co-trustees. An individual who is familiar with your family situation and a professional trustee that will provide unbiased advice.
I always espouse that the most important part of estate planning is being certain that your overall plan provides for your care during your lifetime.