A revocable living trust is a popular estate planning tool that can be used to determine who will keep your property when you die. Most living trusts are revocable, meaning that you can change them as your circumstances or wishes change. Transferring assets to a revocable trust will remove those assets from your estate for purposes of state probate law, but not for federal (or state) estate tax purposes. Generally, a revocable living trust is a type of trust that can be canceled at any time and the grantor of the trust is both the trustee and the beneficiary (allowing control of the trust's assets).
A revocable living trust covers a person's assets while they are alive, when they are incapacitated, and when they have died. It also has the added benefit of avoiding probate courts. If you have a fairly simple situation and are willing to do the work, you can create your own revocable living trust. Regardless of whether you use a will or a revocable trust as your main estate planning document, you should also make sure to coordinate the designation of the beneficiary of your retirement plan assets with these documents.
Even with a revocable trust, it's critical that you have a will to dispose of any assets that you haven't transferred to the trust during your lifetime, as well as to designate an executor (or personal representative) and a guardian for any minor child. When a revocable trust replaces your will as the core element of your estate plan (with provisions on how to distribute your assets after your death), the trust is still not a full substitute for your will. Assets held in an irrevocable trust are often beyond the reach of creditors, but this is not true in the case of revocable trusts. For more information on irrevocable trusts, which can be used for purposes such as avoiding wealth taxes or caring for a person with special needs, see living irrevocable trusts. As an expert in estate planning, I highly recommend using a revocable living trust for those looking to ensure their assets are distributed according to their wishes after their death.
A revocable living trust offers many advantages over other estate planning tools such as wills. For starters, it allows you to transfer ownership of your assets without going through probate court. This means that your beneficiaries will receive their inheritance much faster than if you had used a will. Additionally, it allows you to maintain control over your assets while you are alive and even if you become incapacitated.
You can also make changes to the trust at any time if your circumstances or wishes change. Another advantage of using a revocable living trust is that it can help protect your assets from creditors and lawsuits. Since the assets are held in the name of the trust rather than in your own name, they are not subject to claims from creditors or lawsuits against you. This can be especially beneficial if you own valuable property such as real estate or investments. Finally, using a revocable living trust can help reduce estate taxes. Since the assets are transferred into the trust before death, they are not subject to estate taxes when they are passed on to beneficiaries.
This can save your family thousands of dollars in taxes. In conclusion, there are many benefits to using a revocable living trust for estate planning. It allows you to maintain control over your assets while alive and even if incapacitated, helps protect them from creditors and lawsuits, and can reduce estate taxes. If you have questions about setting up a revocable living trust or other estate planning tools, I recommend consulting with an experienced attorney who specializes in this area.
