29 Jul 2016

Living Trusts and your Financial Future – Disability Planning

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Clients often ask me why I favor a living trust over a will and durable power of attorney.   A Living Trust is not for everyone, but one good advantage is the power the trustee has to immediately step in and start making decisions on your behalf in the event of you become disabled.

For example, assume you have investment accounts and perhaps some rental property as well.  So you create a living trust and transfer your investment accounts to your living trust (except retirement accounts), and provide your bank or broker dealer with a copy of your signed trust.  If you have property other than your home, such as rental property, you may also transfer the rental property directly to your living trust.  (Or, if the rental properties are in a limited liability company, perhaps you may transfer the membership interest to your living trust instead).

Then, boom, you are in a car accident, disabled and unable to handle your investments or manage your rental property.   Because your assets (other than retirement accounts) are titled in your trust, you successor trustee may step in and immediately start to manage your investment accounts and other property.   Using only a durable power of attorney and no living trust, your agent may have to hunt around your home to find the power of attorney, fax it to your broker and hope they will accept it.   All before being able to act on your behalf.

All this takes time to accomplish, and in the meantime, if your account is subject to large negative changes in account value due to market conditions, the delay before your agent may act on your behalf could end up costing you dearly.    Or, if your renters are behind in rent or damaging your property, your agent may not be able to act immediately to protect your property interests.

Please feel free to contact me for a free consultation at 303-457-9500.  James Morgan, J.D.,CFP.

The above is legal information and not legal advice, and may not apply in every situation.


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