Revocable Living Trust
Did you know that a revocable living trust can protect you as well as your loved ones, beloved pets, and assets – almost as if by magic? Would you like to:
Keep your children’s inheritance from being taken by a divorcing spouse?
Best ensure that your beneficiaries’ inheritances are not seized by creditors and not used to fuel an addiction?
Keep the court, predators, and nosey neighbors from knowing who got what?
Revocable Living Trust
Revocable living trusts (aka “living trusts” or “trusts”) are akin to Harry Potter’s magic wand. The benefits are almost magical and the drawbacks few, in fact, de minimis to believers of trust magic.
By the time you finish reading these 700 words, you’ll likely be a believer as well – and, rest assured, there’s no Kool-Aid involved.
After all, who wouldn’t want to keep her finances and affairs private, protecting herself, her loved ones, and her assets? Save money, time, and hassle? Stay in control? And, do it all legally and without giving up a limb?
What is a Revocable Living Trust?
Technically, a trust is a contract, a written agreement. Most estate planning clients can relate to an instruction book analogy, so we’ll use that here.
Your trust is an instruction book – a “revocable” one, meaning your instructions can be changed, amended, or destroyed at any time you are alive and well.
“Living” means that you create this trust while you’re alive and thereby benefit from having it while you’re alive.
Your living trust can avoid probate, save you gobs of taxes and legal fees, and keep your nosey neighbors from finding out who got what, but there’s so much more to it than that.
Do I Need a Revocable Living Trust?
Most folks would benefit from having a trust as the center of their estate plan, but whether you actually need one or not depends on your goals as well as your assets.
To find out whether you need a trust, we suggest you do two things: First, read the rest of this page and, second, consult with the qualified estate planning attorney of your choice. This is really the only way to know for sure.
What are the Benefits of a Revocable Living Trust?
We can’t provide legal advice on a website; no one can. Only an estate planning lawyer, who fully understands your goals, concerns, assets, and family situation can.
That being said, if any of these benefits seem magically intriguing to you, a trust may be a good fit and you should investigate further.
Would you like to:
- Avoid court interference and keep your family and financial affairs private by avoiding guardianships, conservatorships, and probate?
- Provide trusted helpers (e.g. loved ones) with instructions so they know what to do when you can’t tell them?
- Reduce family discord?
- Protect your beloved pets so they continue to be cared for as you would care for them and are not let out the back door or dropped off at a shelter?
- Protect your beneficiaries’ inheritances, so they are not seized by a divorcing spouse, bankruptcy, medical crisis, or lawsuit, thus protecting 100% of your assets?
- Keep inheritances from fueling an addicted beneficiary’s drug, alcohol, or gambling addiction?
- Protect beneficiaries from predators and conmen?
- Prevent inheritances from disqualifying a loved one from receiving governmental assistance?
- Save up to about $2 million in federal estate taxes by including family trust and marital trust provisions within your trust? (For those of you who are wondering about portability, it’s benefits haven’t played out in the courts yet and sub-trusts are still appropriate for tax and other reasons.)
- Prevent your children and grandchildren from accidently being disinherited when a spouse remarries?
- Prevent your spouse’s inheritance from going to a new friend, Bambi or Biff?
- Save gobs on legal fees and trustee fees?
- Significantly decrease the burden on your loved ones?
What are the Drawbacks of a Revocable Living Trust?
Your estate plan really will look like an instruction book. It’s full of papers (e.g. documents) with instructions.
There are only 3 potential living trust drawbacks. We’ll let you determine whether these are really drawbacks - or not.
Because of the complexity of legal counseling and the value conveyed by trust planning, a trust costs more than a simple will, which has none of the benefits listed above.
The choice is yours: Pay now and get all those benefits or pay later and get no benefits.
- You must fund your trust by changing the name on many of your assets from your individual name to the name of your trust.
However, you must own your assets properly to best ensure that any estate plan works, including a will-based plan.
Basically, this drawback is some paperwork that needs to be done at some point, and it’s likely a lot easier when you’re around to help.
- Qualifying for Medicaid to pay for nursing home care has some tricky rules. If you may need to apply for governmental assistance to pay for nursing home care in the next 5 years, make sure your estate planning attorney knows of this possibility.
At this point, you likely have a good idea of whether trust magic appeals to you – or not. Your next step is to determine whether you need or want a revocable living trust in your estate plan or whether it would just be overkill. To do so, consult with a highly qualified estate planning attorney.
