Every professional sports team has a pool of players it can draw on in case of injuries or other issues that may sideline a star player. Having a deep bench is essentially insurance against an unexpected event having an adverse impact on a team’s overall performance.
In much the same way, individuals and families need their own equivalent of a deep bench, backups who can step in and assume control of their financial affairs in case an unexpected event prevents them from doing so themselves.
Who to Choose as Your Backup
An accident or a serious illness could sideline you for several weeks or months. What would become of your financial affairs during the time you were incapacitated? Like most people, you would probably say that you want a family member or a close friend to have the legal authority to act on your behalf in circumstances such as these. That’s understandable, especially if the friend or family member you choose has the expertise and the time to assume control of your financial affairs and handle all issues that might arise in a professional manner.
However, that may not be a realistic option. It can often make more sense to use a revocable living trust with a professional co-trustee to serve as your backup.
Living Trust Basics
With the help of your attorney, you can establish a revocable living trust and transfer assets into it. After you create the trust, you may continue to manage your finances as usual. However, you establish specific guidelines in the trust agreement that dictate the circumstances in which your co-trustee would step in and manage the trust assets on your behalf. You can also designate the individuals you want to ultimately receive the trust assets.
A Living Trust Is Flexible
A revocable living trust gives you the flexibility to change it any time you choose to do so. You can amend the trust’s provisions, add or reduce the level of responsibility you give your co-trustee, name new beneficiaries, or even terminate the trust. A revocable living trust lets you stay in control of the trust and its assets.
Continuity of Management Is a Big Plus
Your living trust arrangement can keep your assets under the care of a professional investment manager after your disability or death. Uninterrupted, professional care can help protect your assets and is particularly valuable and important if your beneficiaries are financially inexperienced.
A financial professional with expertise in estate planning can explain the many advantages of a revocable living trust and the benefits of using a professional trustee to administer the trust. Contact us if you would like to learn more about preparing for the unexpected with the help of a trust.