Revocable living trusts, or more simply, living trusts are an estate-planning instrument used to determine who stands to inherit your property in the event of your passing. A living trust also insures that your assets will be properly managed and maintained in the event of your incapacity. Most trusts are “revocable” because you can change them as your circumstances or desires change over the course of your lifetime. Use of a revocable trust is essential if you select an institution, such as a bank or trust company, to succeed you in managing your financial affairs.
How Revocable Living Trusts Avoid Probate
A revocable living trust can be used as a substitute to your will as it will become the primary document directing the administration and distribution of your assets. Revocable trusts are often implemented to avoid the costly hang-ups brought about by the probate process. Probate can be expensive, time consuming, and is often more of a burden than a help. Property left through a living trust can pass to beneficiaries without probate. As long as you are attentive to maintaining all of the assets in the revocable trust throughout your life, upon death, your assets will pass through the trust avoiding the probate process. Unfortunately, some people establish a revocable living trust only to neglect transferring all their assets to the trust. In the case of this unfortunate occurrence, a probate proceeding will be required upon the death of the trustmaker, essentially undermining the objectives of estate planning.
The Benefits of Revocable Living Trusts
In many instances, the revocable living trust instrument offers a beneficial solution with advantages that include:
- Avoiding costly Court proceedings, such as Probate, contested Wills, and Guardianships
- Hindering the efforts of a child, spouse or other beneficiary to contest the distributive structure identified in the trust
- Providing a means for managing assets during your lifetime if you were to become incapacitated or unable to manage your financial affairs.
- Provides for the care of loved ones who have mental or physical impairments, struggle with addiction, or lack financial responsibility
- Navigates complex family situations, such as blended families or unmarried couples
- Establishes adaptable Estate Plans to execute your personal wishes; including how you want your money spent or specifying which long-term care facility you want to live in.
- Maintaining privacy as to the assets, beneficiaries and terms of distribution
As with all things there are some disadvantages of a revocable living trust which include:
- The costs associated with transferring all the assets into the trust
- The requirement that all existing assets remain in the trust and that all newly acquired assets are transferred into the trust
The key to making a revocable trust work for you is to consult with an adviser who truly understands your objectives and your specific financial situation. They must have the necessary expertise in estate, tax and investment planning.
SCC Legal will take the time to explain and recommend all estate planning tools available and appropriate to your individual situation. Call us today to schedule a free consultation we will begin your estate planning now.