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Revocable Living Trust

Revocable Living Trust

Introduction

A revocable living trust, also known as a living trust, is a legal document that allows individuals to transfer their assets into a trust during their lifetime. The individual remains the trustee of the trust and can continue to manage their assets as they did before creating the trust. However, upon their death, the assets in the trust are immediately passed on to the designated beneficiaries without having to go through probate court. In this article, we will explore the benefits of a revocable living trust and how it can be used as part of an estate plan.

Avoiding Probate

One of the most significant benefits of a revocable living trust is that it allows individuals to avoid probate court, which can be a lengthy and expensive process. When an individual passes away with assets in a trust, those assets are immediately passed on to the beneficiaries designated in the trust. This can save time and money and ensure that assets are distributed according to the individual’s wishes.

Privacy

Another advantage of a revocable living trust is that it is a private document and does not have to go through public probate proceedings. This means that the individual’s financial affairs remain private and do not become part of the public record.

Flexibility

A revocable living trust offers flexibility that other estate planning tools, such as wills, do not. The individual can change the terms of the trust at any time during their lifetime, allowing them to adapt to changes in their life circumstances. This also allows them to add or remove assets from the trust as needed.

Protection from Incapacity

In addition to passing assets on to beneficiaries upon death, a revocable living trust can also protect the individual’s assets in the event of incapacity. The trust can include provisions for a successor trustee to manage the assets if the individual becomes incapacitated and unable to do so themselves.

Avoiding Estate Taxes

While a revocable living trust does not offer any estate tax benefits, it can be used as part of a larger estate plan to minimize or avoid estate taxes. By structuring the trust to pass assets according to certain guidelines, such as to a surviving spouse or other family members, the individual can maximize their estate tax exemption.

Conclusion

A revocable living trust is a flexible and powerful tool that can be used as part of an estate plan to avoid probate, provide privacy, offer protection from incapacity, and minimize or avoid estate taxes. It is an ideal choice for individuals who want to ensure that their assets are passed on according to their wishes and avoid the expense and delay of probate court. It is important to work with an experienced estate planning attorney to determine whether a revocable living trust is right for your unique situation.


What is a revocable living trust?

A revocable living trust is an alternative to a will that provides for the disbursements of one’s assets to beneficiaries, with conditions. This is a preferable option to the instant disbursal of assets upon one’s wealth, especially if there are concerns for how the beneficiaries will use their windfall. Additionally, the revocable living trust can be active while you are alive, rather than having a will which is active only upon your death. As the name implies, you can make adjustments to the revocable living trust to meet changes involving assets or the status of beneficiaries.

Why should I establish a revocable living trust?

In a revocable living trust, the wishes of the deceased are already established, so there is no need for the probate process. The probate process is lengthy and will require lawyers as well as the interference of the government. Beneficiaries will instead follow the instructions outlined in the revocable living trust. This process is private while probate is a public matter. The revocable living trust also allows the grantor the freedom to adjust the trust allocation to his or her living while they are still alive.

You will also eliminate challenges to the estate through the establishment of a revocable living trust. In your instructions for the revocable living trust, you will be able to stipulate who may be a beneficiary, as who is specifically disallowed from benefiting from the estate. Without a revocable living trust any family member can make claims on the estate, especially as the details of the estate will be made public.

How can a revocable living trust be used to control the assets disbursed to beneficiaries?

Even after the holder of the estate dies, a professional trustee can be used to carry out your wishes and withhold or modify the revocable living trust according to the wishes you have stipulated before your passing. In this way, you will ensure that the estate is spent properly rather than squandered due to a lack of oversight.

What are the disadvantages of a revocable living trust?

Revocable living trusts are not a perfect solution. You will incur several costs from planning and administering the estate, especially if there is a professional trustee involved. The more complex and extensive the estate, the more you can expect to pay for revocable living trust expenses. You may also need to allocate additional assets that cannot be immediately included in the trust through a will. This means that you will have to go through the additional expenses and time to establish a will that will transfer the property in question to the trust to be administered.

If you feel that you would prefer either a revocable living trust or a will as an estate resolution solution, one should contact a trusts lawyer that will be able to evaluate your estate and determine an estimate on how much it will take to establish the trust and administer to it. The trusts lawyer will also be able to procure a professional trustee, if necessary, through professional relationships.