How a revocable living trust and a will help your family member with dementia.
Wills and revocable living trusts are documents that distribute an estate after death. When your family member has been
diagnosed with dementia, it is time make sure that all her legal paperwork is in order. Planning and knowing how things will
be taken care of after her death is part of the organizing and preparation that will smooth out your caregiving
A will is the conventional tool that most of us are familiar with. In her will, a person details how her remaining assets will be distributed,
after all bills and final expenses are paid. She also appoints an executor who performs all duties necessary to
settle the estate. This includes activities like notifying creditors that the person has died, paying all bills,
filing a final tax return and distributing assets to the heirs. When a person dies, her estate must be probated.
Probate is a legal process through the courts that takes from 6 to 12 months to complete. While some executors may
hire an attorney to assist with probate, others consult with an attorney and then handle the probate process themselves.
A revocable living trust is a trust created during a person’s lifetime that holds an individual’s assets. Like a will
it can be used for distributing assets upon the death of the person who established the trust.
The trust differs from a will in these significant ways:
- The settlor (creator of the trust) appoints a successor trustee who will make financial decisions in the event
that the settlor is incapacitated.
- At the time of death, a trust speeds up the distribution of assets because the estate does not go through probate.
- Information about the estate’s assets, debts and beneficiaries is private because the details do not end up as part
of the public record via probate.
All assets belonging to the settlor (creator of the trust) should be transferred into the trust. It is recommended
that you create a “pour over” will that says what should be done with any assets that are not included in the living
Revocable living trusts require a larger initial investment of cost and time. The total cost of establishing this type of trust is usually similar to that of establishing and probating a will. The trust costs more to
establish and takes less time and expense to disburse the assets. A will costs less to establish initially and
it takes more time and cost to settle due to the probate process.
It should be noted that both tools do not minimize tax consequences or prevent assets
from being counted when qualifying for Medicaid. If preservation of large estate is a key priority then consulting
with an estate planning attorney and tax specialist is a must.
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