A revocable trust or living trust is a trust that is created and owned by you during your lifetime. It is often a device chosen in place of a will in order to avoid burdensome probate procedures and speed up the transfer of family wealth at death.
A living trust works much the same as a will: In the event of your death, the trustee (person or entity you appoint to oversee the trust) distributes your assets to your beneficiaries according to your wishes.
Living trusts can be altered during the course of your lifetime, and provide an extraordinary amount of flexibility to distribute your wealth at death based on your goals and final wishes. You are able to name any beneficiaries you choose, and determine what assets will be given to them and in what time frame.
A living trust is truly an excellent estate planning option, and one that is preferred by many who seek long-term planning for their wealth.
A living trust is also federally insured, as long as the account is held at a FDIC-insured bank.
If your living trust holds assets in an account with an institution that is FDIC-insured, the federal government provides insurance in the event that the bank collapses due to bankruptcy or federal takeover. Regardless of the economic situation in our country, your living trust account is fully-protected, up to the FDIC insurance limits.
– The FDIC currently insures each beneficiary of your trust account up to $250,000, to a maximum amount of $1,250,000 per account and per bank. If you have more than five beneficiaries, each beneficiary is covered up to the greater amount of $250,000 per beneficiary, or $1,250,000.
– The amount of coverage is proportionately related to the number of trust owners. A trust owned by a husband and wife would receive double the coverage limits so long as both spouses were alive.
– The 2004 FDIC rules required that the beneficiaries of your account be your spouse, children, grandchildren, parents, or siblings. Under the new interim rules, all beneficiaries are covered.
Economic conditions change and new legislation is passed. Both of these can affect your estate plan. So it is vital you keep abreast of your plan by consulting with your estate planning attorney as soon as possible.
Whether your estate planning goals are immediate or long-term, a qualified California estate planning attorney will be able to counsel you on the best options available to you to meet your individual needs.
Kevin Von Tungeln is the Managing Partner of EstatePlanningSpecialists.com and Thompson Von Tungeln, P.C. Kevin practices in the areas of estate planning, probate, wills, and trust administration. Visit www.EstatePlanningsSpecialists.com or www.linkedin.com/in/kevintungeln.