Monthly Archives: January 2023

What is a Revocable Living Trust?

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Video explaining what a Revocable Living Trusts

What is a Revocable Living Trust? Click play on the video above to learn more about revocable living trusts and how they can assist you with your estate planning needs. A living trust can be an incredibly valuable and powerful tool when it comes to estate planning. A revocable living trust is a legal arrangement, used by estate planners that allows assets to be held and managed by a third party. This third party in a trust is known as a Trustee. The Trustee is the person or group of people responsible for ensuring that an estate is handled in the manner specified in the trust documents.

A revocable living trust lets you decide how your assets are managed and distributed. A living trust holds (owns) the property you put into the trust. Unless specifically stated in the language of the living trust, you are permitted to control the trust assets as the trustee while you are living. Upon your death, the living trust becomes irrevocable and the assets in your trust will be distributed to the beneficiaries that you have designated.

The person who creates the living trust, is usually referred to as a settlor or grantor. The successor trustee is the person or institution who takes over the management of a living trust when the original trustee (typically you) has passed or become incapacitated. The beneficiaries of the trust are the people named in the living trust who will receive the assets held by the trust once you have passed.

Language defining the rules of the trust, such as the name of a successor trustee and information on how the assets of the trust are to be distributed upon your passing are all recorded in the trust documents. The living trust is funded by transferring your personal assets to it. Once the assets are transferred, the trust owns the assets. While the trust is revocable and you are designated as the trustee, you may place assets into the trust or remove assets from it. Most types of assets can be placed into a living trust. Common examples of irrevocable trust assets include real estate, land, automobiles, business interests, stocks, bonds and bank accounts.

 

What is a Financial Power of Attorney?

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What is a Financial Power of Attorney?

What is a Financial Power of Attorney?

Financial Power of Attorney

So what is a Financial Power of Attorney? In estate planning, A Durable Financial Power of Attorney is a legal document that lets you appoint someone to handle your finances on your behalf at a specific point in time or under a specific situation such as if you become incapacitated. The person you name in your Financial Power of Attorney to make financial decisions for you is referred to as your agent or attorney-in-fact. The financial agent you appoint can conduct a variety of tasks include paying bills, managing investments and making bank deposits or withdrawals.

There are different types of Power of Attorney legal documents. In estate planning, most people choose to make their Financial Power of Attorney, a Durable Financial Power of Attorney. The term Durable means your financial agent’s authority to act on your behalf remains active even if you should become incapacitated. This lets you select someone to look after your finances and property if you are ever suddenly unable to do so.

A Durable Financial Power of Attorney is similar to an Advance Healthcare Directive in many ways. One never know when something unexpected could happen, so it makes sense to have a plan in place for when something does. It is important to select an agent that you trust and whom you are confident can handle the responsibilities of managing your finances, should you become unable to do so.  People will often select a trusted family member to act as their agent, but it can also be a professional such as a CPA.

So what does incapacitated mean, and when does a Durable Financial Power of Attorney go into effect? Incapacitated means, that you are unable to take actions on your own behalf or you are no longer of sound mind. Some examples of incapacitation may include having a severe stroke an no longer being able to communicate, a car accident that leaves you in an unconscious state, an accident that causes significant brain trauma, later stages of Alzheimer’s or dementia.