Revocable living trusts have become increasingly popular over the last decade or so, especially given the added flexibility they provide to the grantor. Simply put, a revocable living trust is an instrument which can be altered at any time by the grantor (i.e. the individual who establishes the trust). It becomes effective once the grantor places assets into it, and those assets can be removed at any time as the grantor wishes.
Revocable living trusts provide a number of benefits to the grantor and to beneficiaries, including avoiding probate and providing extra flexibility and security in terms of asset management.
Avoiding probate is often one of the goals of estate planning, and revocable living trusts provide one way of doing that. When property is placed in a revocable trust, it is no longer considered to be part of your probate estate. In other words, probate has no role in the disposition of estate property within the trust. It is thus dispensed without court interference.
With revocable living trusts help avoid probate, you prevent the costs and time-consuming processes probate often entails. In addition, it can help ensure that assets are transferred as you would desire. Otherwise, the decisions on what to do with your assets will be dependent upon the court, which may not necessarily be in the best interest of your intended beneficiaries.
To guarantee that your estate makes it to your beneficiaries without interference from probate court, you need legal assistance in structuring and drafting the trust. Hart & David provides the legal acumen necessary to do this successfully.
Flexibility and Security
Another benefit offered by revocable trusts is the flexibility they offer to the grantor. While you are alive, you are able to remove property from the trust, adjust the terms, or cancel it entirely. This allows for a certain degree of security since you can make adjustments if circumstances change.
For many, privacy of personal information and investment decisions is a high priority, which makes revocable trusts highly appealing. The trust document is kept private after death, unlike a will, which is made public.
Misconceptions and Caveats
While it does provide a good way to avoid probate court fees while transferring your estate, a revocable trust does not replace the need for a will. To be completely effective, all of your property must be transferred into the trust. Since this is unlikely, it is necessary to have a will in order to manage any assets that don’t make it in by the time of your passing. There are also a few things that can be done with only a will, such as naming guardians for children or providing instructions on how debts should be paid.
Making changes to a revocable trust may seem simple, but there are costs associated with doing so. Alterations or cancellation must be carefully considered with a basis in sound legal advice before being executed.
As with any aspect of estate planning, it is crucial to understand the options available to you as well as the legal, tax, and financial implications of those options. Having an estate planning attorney with you throughout the process will allow you to set up a revocable trust that will hold up soundly in the eyes of the law. Contact Hart & David for assistance with planning your revocable trust.