A Revocable Living Trust (RLT) is a terrific estate planning tool
used in nearly every estate. It allows you, the trustor (also
called the settlor or grantor), to maintain the ability to change
the terms of the trust or, dissolve the trust completely, while
you are alive.
A trust is an agreement between a trustor(s), also called a
grantor or settlor, and a trustee(s). The individual or
organization that receives benefits from the RLT are the
beneficiaries. The trustor and the beneficiaries are always
different for a revocable living trust. Note, a Domestic Trust allows you be the settlor and beneficiary, while enjoying
protection from creditors.
With no planning, the assets you have will endure through probate
process after your death. This process means a judge determines
how your life’s work is distributed. The probate process ensures
things are taken care and title is only transferred after due
process has occurred. This requires time, money and is part of the
public record. Probate court takes many months, if not over a
year, and adversely affect your beneficiaries.
If you transferr your assets to an RLT prior to death, such as
your home, retirement funds, etc. then your beneficiaries will not
need to wait.
Avoid Guardianship or Conservatorship
What happens if you are incapacitated or unable to fulfill your
duties as a trustee? With an RLT you can name a successor trustee
who will take over your position should you meet the stated
requirements for being ‘incapacitated of incapable of fulfilling
your duties’. These standards are set by you in the trust. Instead
of a court appointed stranger, called a ‘guardian’, being in
charge of your finances a trusted family member or friend will
take control of the trust. Don’t let the state interfere with your
hard earned wealth.
Probate is a part of the public record and trust documents are
not. If you do not have an RLT, then your assets go through
probate to determine who receives what, and then anyone will be
able to research the money you had and who you gifted it to. Trust
documents are never filed in a courtroom and therefore keep your
family out of the public eye.
Living Trust Downsides
No Asset Protection
A revocable trust does not provide asset protection or tax
minimization. The trust is revocable and may be revoked by a judge
at anytime. Assets in the trust are not beyond the reach of
personal creditors. Further, a revocable is a pass through entity
for taxation. This means income run through it cannot be shifted
to lower-tax jurisdictions.
Costlier Than A Will
The initial cost of setting up an RLT is generally higher than a
will, though the long term cost is lower. Estates which exceed a
certain asset value, while only using a will, are still required
to undergo the expensive and public process of probbate. Further
changing the titles of assets and the names on your accounts takes
time and effort. Howeverr, changing the ownership of an asset to
your trust means you will only endure this process once, rather
than each time you update your estate.
Funding The Trust
You will need to contact your bank,investment companies, and life
insurance company. If you’re not champing at the bit to
changeownership of accounts, stocks, bonds, certify new stocks,
retitle cars/boats/houses, then we can happily fund the trust for