Creating an estate plan offers peace of mind for the individual and their family. Revocable trusts are a good fit for many estate plans.
Also known as “living trusts,” a revocable trust is a very flexible document that can be modified during your lifetime to reflect changes in your family or in your circumstances. They typically become irrevocable when you die, at which point they protect assets for your family.
Motley Fool’s recent article, “Revocable Trusts: What You Need to Know,” explains that a revocable trust is a trust you create to hold whatever property you want to be subject to its provisions. What makes a trust “revocable”, is that even after you create it, you can change it or cancel it and distribute its assets back to yourself. When you create a revocable trust, you act as its trustee during your lifetime.
A revocable trust is worthwhile, if you become ill or an injury incapacitates you to such a degree you can’t handle your financial matters. Successor trustee provisions of your revocable trust let the individual you name take care of those matters on your behalf. The successor trustee becomes responsible for paying your regular bills and handling ordinary financial needs that arise. When you're able to manage your own affairs again, you can take back the trustee role.
The revocable trust includes your wishes for what should happen to trust assets after your death. For example, a revocable trust can be useful for those with minor children. You can provide for the trust to continue and for trust distributions for the benefit of those children to be made by the successor trustee, until they’re old enough to handle their own financial affairs.
Another benefit of revocable trusts is that your family can usually avoid probate. Revocable trusts are private documents that typically aren't subject to probate proceedings. A successor trustee can manage your affairs without court intervention or public scrutiny.
Your estate planning attorney will help set up the revocable trust, but you will need to formally transfer the title of your assets to the name of the trust. Neglecting this final step means that the provisions of the trust will not apply, and your heirs will likely have to go to court after you pass—which you were trying to avoid by using a revocable trust—to address distribution of those assets.
An estate planning attorney will be able to explore how incorporating a revocable trust in your estate plan will benefit you and your family.
Legacy Counsellors, P.C. are huge proponents of Revocable Living Trusts. However, we are able to counsel you as to the best estate plan for you. Please contact us today for an initial consultation to discuss your estate planning options.
Reference: Motley Fool (June 23, 2017) “Revocable Trusts: What You Need to Know”