A revocable living trust, is an inter-vivos trust, meaningit is created and takes effect while you are still alive. It has benefits and drawbacks. Although a revocable living trust does not offer the same estate tax avoidance and assets protection benefits that an irrevocable trust offers, it can be an excellent way to plan for your incapacity.
Creating a revocable trust requires you to appoint a trustee, name at least one beneficiary and allocate assets to fund the trust. A revocable trust allows you to appoint yourself as the trustee and beneficiary. In addition, you will need to nominate at least one successor trustee. This should be a spouse, child, parent or other loved one whom you wish to take over in the event of your incapacity.
After establishing the basic framework for the trust, you must decide on the trust terms. This is where you get to define what your own “incapacity” means. You could, for example, require a specific number of doctors to declare you incapacitated. You could also call for a panel of experts to make the decision or simply designate a family member or loved one to decide — it is your decision how you define the term.
Once you have been declared incapacitated, your successor trustee will take over control of the trust. The benefit to this arrangement is that there is no need to seek court approval. Your successor trustee has immediate access to the trust funds to be used for your care or the care of your family.