Revocable Living Trust: Family Financial Security
The times in which we live have brought new uncertainty and increased anxiety to
our front doors. With the threat of terrorism and the reality of war, our safety
and that of our loved ones are at the forefront of our concerns. For many a continually
disappointing investment environment has reduced personal savings and eroded retirement
Of course, there is still reason for optimism. On the world scene, the conflict
in Iraq is ending—although the difficult job of rebuilding and providing aid will
continue, perhaps for a long time to come. On the national front, although the economic
and investment climate remains uncertain, the postwar environment may, possibly,
augur for better days ahead.
On the home front, there’s the best news of all. There are ways that you can act
to protect your family, helping to ensure their continued financial security. Surprisingly
enough, one of those ways is by means of a financial management tool that is not
new at all, but has existed since the time of the Crusades—the revocable living
Comprehensive and flexible
A revocable living trust can serve a wide variety of purposes. It is flexible enough
to fit an individual’s or family’s specific needs or circumstances like a glove.
It can serve for the near term, as well as for the distant future. Best of all,
it can be updated, modified, even cancelled, at any time.
A revocable living trust is an ideal arrangement for people of substantial means,
both those who wish to retain control over their investments and those who seek
professional advice. At the same time, the knowledge that you are providing long-term
financial security for your loved ones can do much to bring you peace of mind, at
a time when that feeling may be in short supply.
Below is just a short list of some of the specific financial planning needs that
a revocable living trust can offer you and your family:
1. A choice of investment management styles
People have different perspectives, especially when it comes to the degree of control
that they wish to maintain over their investments. Some people seek someone who
can ably handle all the chores associated with investing but wish to keep complete
autonomy over the actual investing process itself. Some would like having an advisor
near at hand, to offer guidance but leave the ultimate decision making for themselves.
Still others recognize that they lack the necessary skills to maneuver through the
intricacies of investing in today’s world, and they seek skilled professional asset
A living trust agreement can be structured to permit whichever style suits your
needs. A typical arrangement—but only one of many possible—might provide that you,
the grantor of the trust, direct us, the trustee, to manage your investments and
the income that they produce; invest new funds as they are added to the trust; and
pay out sums of principal as the occasion warrants. If you wish, you can direct
that the trust continue after you’re gone, paying out the income from the trust’s
investments to your family, providing an uninterrupted source of financial support.
2. An emergency contingency plan
As a result of recent events, many more people are expressing concern about the
management of their investments and other finances in the event that something unexpected
occurs. For instance, what can a head of household do to protect his or her family
if disability or major illness strikes? A living trust (often, in these circumstances,
referred to as a “standby,” or “convertible,” trust) may offer the best solution.
Here, the trust remains inactive, coming to life only in the event that the disability
strikes, becoming inactive again if and when the disability abates.
In addition to taking over all investment responsibilities, the trustee can be directed
to pay routine monthly bills, taxes and medical expenses—even arrange for nursing
care or household help, removing those burdens from a spouse or family member.
3. An action plan for special family circumstances
A revocable living trust can be a practical, flexible way to set aside significant
funds to be invested for a young child or grandchild as a means of providing for
a college education. It can be established to provide a life income for an older
relative, such as a parent, aunt or uncle. A trust can be drafted to assist a child
with special needs, offering parents the peace of mind of knowing that financial
support will continue after they are no longer able to help their child.
4. Privacy and economy in managing assets
A will offers no degree of privacy; it is a matter of public record. A trust is
a private document in most states, thus allowing your finances to escape public
scrutiny. Assets in a trust are not subject to the potential delays and costs associated
with probate proceedings. The privacy aspect of a living trust is especially comforting
when an individual becomes incapable of managing his or her financial affairs. The
publicity, time and expense of a formal conservatorship proceeding is avoided when
a living trust has been put in place.
5. An estate planning assist
A will alone is usually insufficient to arrange for the disposition of a lifetime’s
accumulation of wealth. A living trust can operate as a highly efficient organizational
tool, offering a unified management of your estate. For example, your will can provide
that assets such as life insurance or retirement benefits be paid to a preestablished
living trust that becomes irrevocable at your death.
Such an arrangement accomplishes several key goals. It can provide for the continuous,
uninterrupted flow of income for family members and for an orderly distribution
of family assets over the years, according to your wishes. And although a living
trust itself offers no inherent tax advantage, if the trust become irrevocable at
your death, it can be structured to shelter part of the trust’s assets from later
tax at the death of a spouse.
Naming a trustee
There are literally dozens of planning approaches and problem-solving opportunities
available with a living trust. But for whatever purposes your revocable living trust
is established, it’s extremely important to choose a trustee with the knowledge
and experience to make certain that your wishes are carried out. Call upon us. We
can work with you and your legal advisor to structure a living trust arrangement
that suits your own particular needs and circumstances—and build a solid foundation
for your family’s financial security for today and tomorrow.