A revocable living trust is one of many different estate planning tools available. In its simplest definition, it is a written document that determines how your assets will be handled after your passing. These assets can include:
Just like all living trusts, you create a revocable living trust during the course of your lifetime. Most living trusts are “revocable” as you can change or cancel the provisions you outlined at any time. However, upon your passing, the terms of the trust will become irrevocable and the assets you placed in this trust will be transferred to the beneficiaries according to your last written designations.
As the creator of this trust, you are known as the grantor, and as the grantor of a trust, you are able to take your personal assets and transfer them to the ownership of the trust during your lifetime. While the trust owns the assets, the grantor is permitted to use them as they normally would until their passing. This includes continuing to live in their home, drive in their car, or make financial decisions.
As the grantor of this trust, it is generally advised to place as many assets into that trust as possible in order to take full advantage of the benefits it provides. However, not all assets are eligible for transfer to a revocable living trust. Some assets that are not transferable are life insurance and Individual Retirement Accounts (IRAs) since these accounts require you to name a beneficiary. Even though there are some restrictions on this trust, the benefits outweigh the drawbacks for many people. The top benefits of a revocable living trust include:
One great benefit of is that they are not set in stone — you have the ability to make changes whenever you have a significant change in circumstance. This flexibility allows you to start your estate planning process at a young age.
This trusts can even prove beneficial before your passing. For example, if you ever become incapacitated, your successor trustee is automatically able to manage your financial affairs. This takes away the need to go through court proceedings or appoint conservators.
One of the biggest benefits of this trust is that you can avoid dealing with probate. Probate is the court-supervised process of finishing up a person’s estate. Probate can be expensive and time-consuming. If possible, it is best to avoid it.
After your passing, a will becomes public record. In comparison, estates inherited via a living trust are distributed privately. This means no one will be able to search public records to discover who your beneficiaries are and what they inherited.
A revocable living trust is an extremely common estate planning tool due to its many benefits for both individuals and their families. Just about anyone would likely benefit from creating a this trust. However, this trust is especially beneficial for individuals just starting their estate planning or those unsure of who their beneficiaries will be or which beneficiaries will receive what assets.
You should consider creating a revocable living trust if:
While you do not technically need a lawyer to create a revocable living trust, working with one is most likely in your best interest. An experienced estate planning attorney can help you navigate creating this trust seamlessly. If you have more questions regarding creating this trust, consult with a qualified estate planning lawyer today.
Whenever you find yourself needing to reach out to our office, you can be sure you won’t need to wait for hours or days in order to get a response. Here at Stafford Law Firm, we pride ourselves on being easily accessible and on responding to all client inquiries as soon as possible.
The fact of the matter is, one day you will need to fall back on your estate plan. Whether it will simply be to pass on your family’s wealth after you pass, or something even more heartbreaking like needing a new guardian appointment for your children, having a thorough and customized plan in place will help make sure your family and your future are well taken care of. This plan could need to include a revocable living trust, and you can rest easy knowing that an experienced Houston Trust Lawyer has your best interests at heart.
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For the most part, the advantages of revocable living trusts outweigh the disadvantages, but the disadvantages still exist. Some of the potential disadvantages include:
It does not provide tax benefits
There is no significant asset protection with a revocable trust
There is a lot of paperwork and record-keeping involved
In a revocable living trust, the trustee is the owner of any and all property in the trust.
There are several benefits to setting up a revocable living trust, but the main purpose of this document is to help your heirs avoid the long and stressful probate process, as well as protecting their privacy.