The Four Stages of a Revocable Living Trust

When I meet with a Client for the first time about estate planning, I often find that there is a lot of confusion about revocable living trusts and their purpose.  I like to define estate planning as a lifetime process whereby:

  • I control my property while I am alive and well

  • I take care of myself and my loved ones if I become disabled

  • I give what I want to whom I want, when I want and the way I want

  • I do so with the lowest possible amount of professional fees and court costs

At the most basic level, the difference between a will and a trust is the avoidance of probate at death and a greater likelihood of avoiding the need of a guardianship or conservatorship or conservatorship at death.  A well drafted revocable living trust for a married couple, however, will cover in sufficient detail answers to the following four questions:

  1. How are our assets managed when we are both alive and able?

  2. How are our assets managed when one or both of us are incapacitated?

  3. How are our assets managed when the first spouse dies?

  4. What happens to our assets when both of us have passed away?

There can be a variety of ways these questions are answered based upon your personal needs and objectives.  Unfortunately, I find in my review of many documents that the first three stages get little if any attention and at best fourth stage is addressed, though maybe inadequately.  How does your revocable living trust stack up?