Traditionally, estate plans consist of a will and other legal documents that are intended to provide a guide for fulfilling the wishes of an individual before and after death. However, there are times when an individual’s estate may be better served by employing other estate planning methodologies. One of these options is a revocable living trust. A trust can provide privacy, flexibility, and ease of administration. Revocable living trusts are becoming quite popular and should be taken into consideration when planning your estate.
Why Plan an Estate with a Revocable Living Trust?
The individual creating the trust, known as the “Settlor,” funds the trust by titling (or transferring) assets to be held in the name of the trust. Generally, the Settlor designates himself or herself to serve as the initial Trustee. The Settlor also designates a successor Trustee who holds, manages, and distributes the trust assets. The successor Trustee administers the stated terms of the trust upon the incapacity or death of the initial Trustee.
This kind of trust provides flexibility. It is entirely revocable prior to the date of the Settlor’s death, which means that the Settlor may alter or change the terms or assets of the trust at any time. Additionally, if the Settlor becomes disabled, the administration of the assets held in a revocable trust will continue without interruption to be under the successor Trustee’s control.
The most significant advantage to a revocable trust may be the continued access to the trust assets when the Settlor passes on. If the revocable trust was funded during the Settlor’s lifetime, the assets held or titled in the trust would not have to go through probate proceedings. In some states, a probated estate must remain open for a specified length of time to give the settlor’s creditors enough time to make claims against the estate’s assets. While an individual cannot use a revocable trust to prevent creditors from taking what is due to them, the beneficiaries of a funded trust can receive their interests without this particular delay.
Are There Downsides to a Trust?
Although revocable trusts are preferable to many, there are some downsides to them. First, they are more complicated than wills and need more time and money to create. Second, while the terms of a revocable living trust replace the necessity of having a will, creating a straightforward and simple “pour-over will” is still advisable. This “pour-over will” ensures that, upon the death of the Settlor, any assets not held in the trust are transferred to it according to the Settlor’s wishes.
Like a will, a revocable living trust is not a cookie-cutter estate planning approach. However, it is one that has many advantages and is an increasingly common method of estate planning. To find out what estate planning vehicles would best serve your needs, it is wise to contact an estate planning attorney. In a consultation, an estate lawyer can help you to determine which type of estate plan would provide the best management of your estate and offer the greatest peace of mind.