Revocable Living Trust

No matter your age or profession, everyone should have an estate plan to protect their loved ones after death.

Luckily, there are several options available to tailor to your specific needs and wishes. For example, you can create a revocable living trust because of the multiple benefits it provides and flexibility it offers.

Revocable living trusts are a great way to pass on your wealth and assets for generations to come. Before we dive deep into the benefits of a revocable living trust and how to form one, you first need to understand what a revocable living trust is and how it works.

What is a Revocable Living Trust?

A revocable living trust basically takes the place of a will. Instead of allowing the court to disburse your assets and wealth when you pass, a revocable living trust allows you to disburse the assets directly to your beneficiaries.

A revocable living trust gets its name for two reasons. “Living” because they’re made during your lifetime and “revocable” because of how flexible they are allowing owners to change the terms at any time. With a revocable living trust, you can remove beneficiaries or designate new ones, and adjust the rules of how your assets are managed as you please.

The main purpose of a revocable living trust is to keep your assets private and avoid probate court and the costly expenses of the probate process while making the transfer and management of your assets easier. Revocable living trusts also act as a legally binding document to help make decisions if you cannot because of health reasons.

What Assets Can be put into a Revocable Living Trust

There are many different assets that you can put into a revocable living trust. Most trust owners put more expensive and valuable assets in the trusts because they avoid probate. The more expensive the asset, the more expensive probate court fees and expenses will be.

Here are a few examples of assets commonly found in revocable living trusts.

  • Real estate property
  • Stock or bonds
  • Valuables (antiques, artifacts, etc.)
  • Collectibles
  • Copyrights
  • Business shares/stock

Revocable Living Trust Advantages

Revocable living trusts do not provide asset protection. Like an irrevocable trust, it is flexible and is the basis of many family estate plans. Revocable living trusts offer more privacy and flexibility compared to other legally binding documents.

Here are a few of the many advantages of starting a revocable living trust.

Assets in trust avoid probate – Assets held in a revocable living trust avoid probate because the trust itself doesn’t diminish with the trustmaker. The trust stays alive even after the grantor has passed allowing them to transfer its assets to whoever the grantor has chosen.

Flexibility – Revocable living trusts make it easy for trustees to change terms, move assets, and more.

Privacy – Living trusts are never filed with a court, therefore they do not become public record. This prevents people from being able to go to the courthouse and see what assets you own or have stored in the trust.

Avoid Guardianship or Conservatorship – Since you are required to name a trustee when you initially form a revocable living trust, your assets avoid guardianship or conservatorship where the court would be involved in the disbursement of your assets.

Continuous Management – As the owner of a revocable living trust you are required to name a trustee to manage your property and the wealth you have accumulated. All of your assets can be managed for generations. This type of trust even allows you to put restrictions on income and withdrawals from the trust.

Should You Set Up a Revocable living trust?

Anyone with assets that are titled solely to themselves that wants to leave those assets to family or friends if they become incapacitated or pass away, should consider a revocable living trust.

Additional reasons to consider a revocable trust include:

Planning for incapacitation: If you were to become incapacitated, a revocable living trust allows you to name a trustee to manage your assets.

Manage multiple estates: If you own a home in more than one state, you can only avoid probate in the state in which you currently reside. A revocable living trust ensures that your other estates and/or assets avoid the probate process as well.

Complex investment portfolio: If you have multiple assets that would be hard to distribute among beneficiaries - such as antiques or real estate - then a revocable living trust allows you to set certain rules.

Setting up a living trust isn't difficult, but like every legal document, it is a process with unique problems that can occur. The process includes filing proper paperwork, record keeping, transferring taxes, and funding your living trust. To ensure all steps are properly met and the details are filled in correctly, it’s best to consult with an estate planning attorney.