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[R311]Revocable Living Trust Will

by Lorabella, Lor

Trust-based estates are different from will-based estates in that they include a revocable living trust along with a last will and testament. Since the trust includes most of the details that a last will would also include, the will associated with a trust-based estate is far less detailed and includes such pertinent details as the name of the executor or personal representative of the estate.

What is The Revocable Living Trust?

The revocable living trust encompasses three phases of an individual's life. These phases include the time when he is alive and well, the time he becomes mentally incapacitated if he does, and the time after he dies. In some cases, the middle stage of the trustmaker's life never occurs and is simply disregarded.

Typically, the individual who creates a revocable living trust is referred to as the trustmaker. If he is so inclined, he can hire someone to oversee the trust. Typically, this individual will be his attorney or institution. If he decides to oversee the revocable living trust himself while he is healthy and mentally alert, he can choose to do so. When that occurs, the trustmaker is also referred to as the trustee.

How to Create a Revocable Living Trust: First Stage

The first stage of a revocable living trust encompasses that portion of the trustmaker's life when he is alive. Specific provisions are in place within the trust during this stage of the trustmaker's life. These provisions are designed to allow him to invest, manage, and spend his trust assets in the manner that he sees fit.

Generally, it is business as usual with a tiny twist. The trustee, typically also the trustmaker, signs off on each transaction regarding trust assets. Additionally, if the trustmaker is the trustee, he can use his social security number as his taxpayer identification number. His income taxes can then be filed using an IRS 1040 form instead of an IRS 1041 form.

How to Create a Revocable Living Trust: Second Stage

The provisions of the trust agreement that relate to mental incapacity are in place as the second stage of the document. They depict the procedures that must be followed should the trustmaker become mentally incompetent. In some cases, this stage comes about when the trustmaker has suffered a mental breakdown or the ravaging effects of Alzheimer's disease. In other cases, it involves an incapacity due to medical treatments and medications.

If and when this stage comes to pass, the trustmaker can no longer act as trustee and someone else will have to take over for him. This individual is named as the successor trustee within the trust agreement itself. He is listed as a “disability trustee” who will take over for the trustee should he suffer a major downgrade of his mental capacity. The “disability trustee” will be able to take over the management of the trustmaker's finances including his assets and bills.

How to Create a Revocable Living Trust: Third Stage

The third stage of the revocable living trust encompasses the time when the trustmaker has died. The successor trustee at this time is referred to as the “administrative trustee.” This individual is named within the agreement. He takes over all of the trustmaker's finances including his debts, bills, and taxes. The disbursement of the remaining funds is clearly delineated within the agreement and will occur in a timely fashion as long as all of the pertinent details have been taken care of in full. The distribution of the funds will be taken care of by the “administrative trustee.”

First, here are some of the important terms in estate planning: Living Trust - a trust set up during a person's lifetime (during which the trust may be changed or revoked) to avoid probate.

Probate - the legal process by which a will is proved to be valid and binding (can be a lengthy and expensive process).

Will - a formal legal document directing the disposition of assets upon death.

Why it is important for an estate to avoid probate: In the May 2008 American Bar Association Journal an attorney in Chicago says: "Probate in Illinois is relatively painless, so long as there is no litigation associated with it. Probate requires only two court appearances, and the decision-making does not require court approval, so long as there is no litigation or upset heirs interfering with the administration of the estate." There can easily be totally unexpected upset heirs interfering with the administration of the estate. And even just paying an attorney's hourly rate for two court appearances and various court filings can cost heirs a great deal of money.

Probate fees can take a big bite out of a small estate: Attorney's and executor's probate fees are set by law in some states, such as in California. The estate's attorney in California will be paid $13,000 for a small estate of $500,000, which with California housing prices is a small estate. And if the executor doesn't waive the fee, he or she will also receive a fee of $13,000.

For an estate that might consist of only a small residence there can be $26,000 in fees! Plus court filing fees, probate referee fees, certified copy fees and aggravation too much to mention.

Privacy issue - probate is a public process: Another problem with probate is that it is a public process. Anybody who wants to can read a will as it becomes part of the records of the courthouse. If there's a contentious relative being left out of a will, or if privacy is valued, probate should definitely be avoided.

A living trust solves these problems: What is needed so that an estate doesn't have to go through the legal obstacles of probate? A will is not enough to avoid probate. A living trust is needed.

A living trust has the same instructions for the disposition of property that would be expected in a will. But since the trust is a pre-existing legal entity, it continues after death. Therefore, the estate does not have to go through probate since there are no assets that have to be "proved."

Pour-over will takes care of any assets not transferred to the trust: A will is still needed in case there are any assets that have not been transferred to the trust. For example, the proceeds of a wrongful death lawsuit would be picked up by the will because these proceeds didn't exist at the time the trust was set up. The will is known as a "pour-over" will because the will "pours" everything it covers into the trust.

The above information is only considerations for you to discuss with your own estate planning attorney; the information is NOT legal advice. The providing of this material does not establish an attorney-client relationship.

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Both Lorabella & Mitchell Miller are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Lorabella has sinced written about articles on various topics from Home Security, Tax and Finances. For more information about and ,. Lorabella's top article generates over 33100 views. to your Favourites.

Mitchell Miller has sinced written about articles on various topics from Legal Matters, Estate Planning and Legal Matters. Watch the short free video on Mitchell R. Miller's information site at http:// to learn why an estate plan needs to be review. Mitchell Miller's top article generates over 90500 views. to your Favourites.