Helping mom and dad set up a living trust

If your mom and dad have reached the age when they need help with finances, now is the time to arrange a discussion with them regarding their financial health. You need to determine what their assets are, whether they have been properly managed over the years, if they have sufficient savings, and if they have any debt. 

An important part of ensuring that your parents’ finances are protected and properly managed is setting up a living trust as part of their estate plan.

A living trust is a legal document that directs how your parents’ assets and property are to be managed during the remainder of their lives, and what will happen to those assets and property after they have passed away.  

When considering a living trust for your parents, an important first step is discussing their plans with them — are they considering moving into a senior residential facility or have they thought about the possibility of assisted living, late-in-life healthcare costs, or nursing home care? This is important because there are two types of living trusts — irrevocable vs revocable — choosing between them depends on which one is the best for their situation.

By creating a revocable living trust, your parents can amend or revoke the trust at any time during their lifetime; they retain control of their assets. An irrevocable trust, on the other hand, cannot be amended or revoked, and the grantor loses all rights to the assets and the trust once it is funded. A revocable living trust becomes irrevocable once the grantor(s) die. 

An irrevocable trust could be a good option for people 65 and older who are Medicaid-eligible because it protects the elderly individual from having to dispose of their assets in order to qualify for Medicaid or nursing home care. The trust may be left intact after one spouse dies to care for the surviving spouse.

What you can do

Whatever trust turns out to be the best option for your parents’ financial situation, the first step to setting up any type of living trust is to organize. Sit down with your parents and ask questions about life insurance policies, stock certificates, deeds, and titles. 

Then, working with your parents, gather all of the documents pertaining to their assets. Have your parents choose the beneficiaries — family, friends, or charitable causes — they wish to receive these assets upon their death. Next, your parents, who will be the trustees, will need to choose a successor trustee who will take over when they become incapacitated or die. The successor trustee will also manage their financial affairs, settle any debts, and distribute the assets in the trust as per their wishes. 

Once all of these steps have been completed, you and your parents are ready to create a living trust.

Do you need to hire an attorney?

Although hiring an estate planning attorney to prepare your parents’ living trust is not required by law, it could be very helpful. A living trust professional assures that your trust is legally compliant, properly funded, and set up to help minimize any tax burden to the beneficiaries. A living trust attorney can provide you with objective advice about what type of living trust is best for your parents’ needs.  

The living trusts set up by the Law Office of David W. Foley, located in San Diego, are comprehensive and of the highest quality. They can create a living trust by mail for you. Visit the website to read the procedures for creating a trust by mail.

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