Advanced Medical Directives.  Letter of Instructions.   Last Will and Testament.  All of those are important.

Please folks- don’t think these documents, these preparations only applies to old farts like me. If you have kids- you need to take heed, to ensure your kids are not left high and dry should something happen to you, your spouse, or god-forbid- both of you.  But, there may be another quill in your arsenal to use, too…

To ensure our lives are lived the way we want- to the very end- we should consider one other system.  The Living Trust, also known as the Living Revocable Trusts.

If you are among the top 10% of earners (or the top 5% of wealth-owners) in America, you shouldn’t wait even a minute to adopt one.   (It’s not a bad idea for the rest of us- but our wishes may exceed our pocketbooks, as we age.)

This is not simply to avoid inheritance taxes, even though that has been one of the prime reasons folks develop these trusts.  After all, the GOP has all but eliminated the estate tax.  (You know, the one they call the ‘death tax’.).

The real strength of a living trust is to handle our finances, living arrangements, and other aspects of our lives if we are physically or mentally unable to do so- not just to ensure that probate is avoided and that funds flow to our designees quickly.  And, should our living will (aka  health care or advanced medical directive) stipulate certain life-sustaining messages, the living trust is a vital component of our plan.  It ensures the proper funding and the continued function of a business or home.

Most of us senior citizens become worried that our health can be at risk;  the Living Trust can alleviate some of those concerns. Too many of us will succumb to Alzheimer’s Disease, where we won’t be able to maintain ourselves adequately. The Living Trust can ensure that our bills are paid and our lives are maintained as normally as possible, despite our ailments.

Moreover, for those of us who own a business enterprise, a living trust is vital to maintain the business.  OK, that’s not quite the specific need we really want to address- we need to ensure that our business can maintain the necessary cash flow we need.  The stock for the company would be owned by the trust, which can then be immediately managed by our designees.  Our company will not suffer from a lack of management and its value can be maintained and augmented, should become debilitated or we reach an untimely demise.  (Hmm. We never consider it a timely one, do we?)

We all should think that a living trust is a means to incorporate ourselves (and our spouses, should we have one) and all that we own; the living trust is basically a legal entity created to hold ownership of all of our assets. The person who forms the trust is called the Settlor, the Grantor, or the Trustmaker. In most cases, the Settlor also serves as the trustee for the revocable trust, controlling and managing the assets s/he placed there. Some Settlors prefer to have an institution or attorney act as trustee, although this is somewhat uncommon with this type of trust, unless and until the person is considered to be too ill to do so.

The trust, if you’ve been reading this carefully, should also have a substitute trustee designated.  A person or group that will serve to manage our assets and businesses when we are no longer able.  We should consider some sort of test that would make the transfer of control automatic- not one that needs adjudication in the courts.  Because, by then, our businesses may have suffered irreparable harm, as would our cash flow.

As you can see, these trusts are fairly complex and should be individualized, even though I will provide a simple format for those who so request.  But, really, we all should obtain professional assistance to ensure we haven’t missed something critical in this life-encompassing trust.

And, on that note, a caveat.  I was once asked to review a living trust document- and I noticed it had been copyrighted by the attorney.  Obviously, that document was not individualized- and, over the years, that trust has proven to be unseemingly complex, with a slew of problems that needed constant correction.  (Some of the necessary changes could not be implemented when problems arose, since the individual [the principal of the trust] was no longer considered to be capable. C’est la vie drôle.)

We’ll finish this on Monday- and I have a codicil (  🙂   ) to add on Wednesday next, too.  (Tomorrow is Washington’s Birthday, folks!)

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