The Revocable Trust in the time of COVID-19

Originally published by MehaffyWeber.

The impact that COVID-19 has had on our society is unlike anything we have experienced before, including past public health crises. Globally, people are experiencing a dynamic shift in almost every aspect of their everyday lives thanks to the uncertainty that COVID-19 has wrought. Due to the nondiscriminatory nature of the coronavirus, people who once thought they were decades away from planning for major life moments are having to suddenly consider these scenarios in present day. New legal woes and confusion continue to arise as people scramble to prepare essential probate, guardianship, and other related estate planning matters.

Estate planning prepares and plans for the allocation and distribution of an individual’s assets during their life and/or after they have passed away. Successful estate planning makes estate administration economically efficient and less stressful for the deceased person’s named beneficiaries. Estate planning is crucial in protecting and preserving an individual’s legacy after death. Often times, it is a way to ensure your loved ones will be taken care of when you are no longer able to provide for them. Estate planning can give elderly individuals and their loved ones peace of mind; however, present day fears over the pandemic and related medical issues are pushing younger individuals who are not nearing retirement to consider these legal matters as well. One estate planning method that has provided many with a great sense of relief during these uncertain times is the formation of a revocable trust.

What is a Revocable Trust?

A revocable trust – also commonly referred to as a living trust, family trust, or management trust – is a legal entity that allows an individual to ensure that assets held in the trust transfer automatically to named beneficiaries upon a specific occurrence, usually a death. A living trust is created during the lifetime of either an individual or a married couple, and the person or persons who create it is called the grantor(s). Upon the grantor’s death, the assets held in the Trust are distributed according to the provisions of the Trust agreement, rather than the provisions of a will. Like a will, a revocable trust specifies how your property is to be dealt with upon your death, but since it goes into effect while you are still alive, its validity does not need to be established in a probate proceeding.  It is this quality — avoidance of probate — that has brought the living trust most of its recent popularity.

While a revocable trust and a will both allow an individual to designate beneficiaries for his or her assets, guardians for minor children or incapacitated adults cannot be designated through a revocable trust. Additionally, revocable trusts differ from wills in that they do not require probate, a most attractive benefit because assets formally transferred into the name of the trust can then pass to the named beneficiaries after the grantor’s death without the required fees or court process needed to complete transfers under a valid will. . However, it’s important to realize that wills are able to provide a catchall provision to ensure all assets of  a person are transferred according to his or her wishes, while revocable trusts are only able to transfer those assets that have been specifically transferred into trust.

While the process of putting a revocable trust into place saves the beneficiaries time and the hassle of dealing with probate proceedings, the preparation process is more complicated than that of a will and may not offer the same tax benefits to the grantor. Although initially more expensive to set up and fund, revocable living trusts may save the client from paying court costs and legal fees involved with the probate process.

Advantages of a Texas Revocable Trust

• Revocable Trusts avoid the Texas probate process, which saves time, court costs, and legal fees if planning is done properly and the trust is thoroughly funded.
• If you own real estate outside of Texas, your will has to be probated in each state where you own real estate, multiplying court costs and legal fees.  With a revocable trust, this is not required because the property titles remain in the name of the trust, and the trustee continues to have control of the property before and after the death of a grantor.
• Wills are public record, including any inventory submitted, while trust agreements are typically not.
• Probating a will requires a waiting period before the court can have a hearing to determine if the will is valid, but a trust is effective immediately upon creation and can continue to be operated by the named trustee with no interruption after death of the grantor.
• Revocable trusts only require the agreement of the grantor and the trustee (usually evidenced by their signature), while wills require the signature of the testator and the signature of two witnesses, all of which must be notarized.

Revocable Trust Dilemmas

In order for revocable trusts to avoid probate, they require additional steps in the preparation process that differ from the preparation of a will. While a Revocable Trust is effective as of creation, assets must be transferred into the trust by the grantor to place them under the control of the trustee. The current public health crisis has created the unprecedented predicament in which people have to urgently prepare their estates for the worst-case scenario. Given that the vast majority of the country is living under some form of state mandated shelter-at-home order, in addition to non-essential businesses being ordered to temporarily close, nailing all of the legal requirements of a revocable trust in a timely manner may seem impossible. While the situation is certainly more challenging and is forcing the legal community to operate under unprecedented circumstances, the creation of successful revocable trusts during the COVID-19 pandemic is possible.

With the use of technology, our attorneys are available to assist you in creating a revocable trust today. Once created, you simply need to sign to make it effective – no notary needed. However, the tricky part comes with transferring property into the Trust. Personal Property should be transferred into Trust by assignment and real property must be transferred in by deed. All transfer documents affecting interests in real estate should be notarized.

Alternative Notary Services

Over the course of the last two months, adjustments and adaptations have been made in nearly every aspect of life in order to carry on with some sense of normalcy. We have seen retailers and restaurants convert to curbside to-go and drive-thru services, and other industries have followed suit. The demand for notary services has spiked as individuals and families scramble to get their financial and medical affairs in order, most of which require such validation. Online and “drive thru” notary services can be effective alternatives for individuals seeking to transfer assets into a revocable trust under shelter-in-place orders. MehaffyWeber has multiple licensed notaries on staff and ready to assist our legal team and clients with the lawful execution of crucial documents during COVID-19.

Drive-thru notary services provide a contactless way to sign official documents and have them notarized through a motor vehicle’s window. This allows documents to be notarized without breaking the Centers for Disease Control and Prevention (CDC)’s social distancing guidelines. Additionally, online notary services have been widely adopted by those unable to leave their homes or care facilities or prefer the convenience and safety of an online service. It is important to note online notaries still must be properly accredited in order for your documents to be legally valid.

Since estate planning involves some of our most sensitive legal matters, the documents should be prepared under the supervision and guidance of an experienced attorney. The estate planning and probate attorneys of MehaffyWeber advise clients on their best alternatives and provide contactless notary services during the process.

Texas Estate Planning Attorneys

Regardless of a person’s age, marital status, or income, estate planning is a beneficial and crucial legal matter that should be addressed. Estate planning allows an individual to protect his or her loved ones and assets when they are no longer able to. Our team at MehaffyWeber is experienced in taking the time needed to understand a client’s needs, concerns, and vision for their assets after they have passed and guiding them through the estate planning process during life and the estate administration process after a death. If you would like our assistance in securing your assets for your loved ones, please contact us today to get started.

The post The Revocable Trust in the time of COVID-19 appeared first on MehaffyWeber.

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