​​This FAQ is intended to provide general information only and is not legal or tax advice. Your estate plan works based on applicable law and the specific terms of your will and related documents, including how assets are titled and any beneficiary or payable-on-death (POD) designations.

 

What is a Trust-Based Estate Plan? 

 

A Trust-based estate plan is a comprehensive strategy for managing and distributing your assets during your lifetime, in the event of incapacity, and after your death—while avoiding probate and maintaining privacy. This approach centers on the use of a Revocable Living Trust as the primary governing document for your plan, supplemented by other essential legal documents. Proper asset titling and beneficiary designations are critical to ensuring the plan works as intended.

 

Essential Documents in a Trust-Based Estate Plan

 

1. Revocable Living Trust (Trust)

• Purpose: Holds and manages assets during your lifetime, provides for management during incapacity, and directs distribution of assets after death - without the delays and costs of probate.

• Importance: Maintains privacy, can streamline administration, and may provide more flexibility for asset management and distribution than a will alone.

• Trust for Beneficiaries Upon Death: The trust can create trust(s) for your beneficiaries upon your death to promote generational wealth.  It can also protect assets from creditors, divorce, or poor financial management.

 

2. Pour-Over Will

• Purpose: Acts as a safety net to transfer any assets not already in the trust at death into the trust.

• Importance: Ensures that stray assets are ultimately distributed according to the trust’s terms, even if not titled in the trust during lifetime.

 

3. Financial Power of Attorney (POA)

• Purpose: Authorizes a trusted person to handle financial and legal matters outside of the trust, such as retirement accounts and certain personal transactions, during incapacity.

• Importance: Avoids the need for a court-appointed conservator and complements the trust’s incapacity provisions.

 

4. Advance Directive for Health Care (HCD)

• Purpose: Appoints a health care agent to make medical decisions if you cannot do so and outlines your preferences for care.

Includes:

• HIPAA Authorizations — grant access to medical information

• Living Will — states your wishes for life-sustaining treatment and end-of-life care. 

 

Importance of Asset Titling in a Trust Plan

To avoid probate, assets must be titled in the name of your trust or otherwise coordinated with the plan:

• Trust Ownership: Real estate, bank accounts, and taxable investment accounts are typically retitled to the trust.

• Joint Tenancy with Right of Survivorship: May be retained for certain jointly owned assets but is generally coordinated with the trust plan.

• Transfer-on-Death (TOD) or Payable-on-Death (POD) Designations: May be used for accounts not placed into the trust during life, such as retirement accounts.

 

Importance of Beneficiary Designations

• Beneficiary designations for retirement accounts, life insurance, and annuities must be reviewed to coordinate with the trust plan:

• Primary Beneficiaries: Often your spouse (if married), your adult children as direct beneficiaries, or the trust (or subtrusts for beneficiaries) to ensure consistent management and protection.  

• Contingent Beneficiaries: Named in case primary beneficiaries are unavailable.

 

Significance of Proper Planning

When properly implemented, a trust-based estate plan can: 

• Avoid or reduce probate and reduce court involvement

• Maintain privacy for your family and financial affairs

• Provide for seamless management during incapacity

• Reduce delays and costs in administration

• Protect assets for beneficiaries

• Coordinate tax planning where applicable

 

Summary

A Trust-based plan uses a revocable living trust as the core planning document, supported by a pour-over will, powers of attorney, and advance health care directives. When paired with proper asset titling and beneficiary designations, this structure offers flexibility, privacy, and efficiency—ensuring your wishes are carried out with minimal disruption for your loved ones.