Importance of Incapacity Planning: Using a Living Trust
The importance of incapacity planning may not be clear at first, but it is wise to plan for your future in any instance.
A comprehensive estate plan should do more than just focus on the distribution of your assets when you are gone. Your estate plan should also protect you and your assets while you are alive. That requires your plan to consider the possibility that you will become incapacitated at some point. With that in mind, our Coral Gables, Florida estate planning attorney, Justin Stivers discusses incapacity planning using a living trust.
The Importance of Incapacity Planning
When most of us contemplate creating an estate plan, we typically focus on the need to plan for our death. In some ways, however, incapacity planning is even more important than planning for your eventual death. After all, once you are gone you won’t need the assets you accumulated during your lifetime; however, if you suffer a temporary period of incapacity that ultimately ends, you will still need your assets. If you failed to contemplate the possibility of incapacity, the assets you have accumulated could be diminished – or depleted completely – during your period of incapacity.
You might also find yourself having to live with the decisions made by others during your incapacity. With that in mind, it should matter to you who controls your assets while you are incapacitated. If you do not make it clear who you want to control your assets prior to your own incapacity though, a judge may be forced to make them for you. Worse still, your family and loved ones may end up in a contentious and divisive court battle over the right to control your assets for you if you are debilitated. The only way to avoid that possibility is to include incapacity planning in your comprehensive estate plan. As part of that plan, you may choose to create a living trust.
How Can a Living Trust Help with Incapacity Planning?
Just as your estate plan will be tailored to your individual needs and goals, the tools and strategies you use in your incapacity planning component will also be focused on your needs and goals. One of the most common incapacity planning tools, however, is a revocable living trust. A revocable living trust can be used to transfer control of your assets to someone of your choosing in the event of your incapacity. As the Settlor (creator) of the trust you can appoint yourself as the Trustee of the trust and appoint someone you wish to take over control of your assets during your incapacity as the successor Trustee. Once the trust has been established you transfer all major assets into the trust and while you are capable you control and manage those assets as the Trustee of the trust. If you become incapacitated, however, your designated successor Trustee takes over management of the trust assets until you can resume your role as the Trustee.
The most important benefit to using a living trust to plan for incapacity is that you are able to transfer control of your assets immediately to the person of your choice without the need to go through the judicial system if you do become incapacitated or bedridden at any point. Because the trust is a revocable trust, you are also able to modify the trust easily as well as move assets in and out of the trust with ease. You can even create your own definition of “incapacity” or create your own qualification for determining that you are incapacitated. Finally, you can also include instructions for how to distribute the trust assets after your death if you wish to do so, making the trust a valuable estate planning tool.
Contact Our Coral Gables Estate Planning Attorney
For more information on the importance of incapacity planning, please join us for an upcoming FREE webinar. If you have additional questions or concerns about incapacity planning using a living trust, contact our experienced Coral Gables estate planning attorney at Stivers Law by calling (305) 456-3255 to schedule an appointment.