At any point, do you worry about how your heirs will administer their share of your estate after your demise? A revocable living trust (RLT) is one arrangement that permits you to hold some command over your assets even after your passing.
A written declaration or agreement designating a trustee to manage and control the grantor’s assets establishes a revocable living trust. A capable adult can create an RLT, and the grantor may act as a trustee while still alive.
A respected and widely used way to express your wishes regarding how your assets should be distributed after your death is by creating a will. A will is a necessary tool in estate planning, but it is limited in what it can do. Such limitations can leave significant gaps that could cause delays or issues in the distribution of your estate. However, those limitations can be circumvented by combining a will with a trust. This article outlines ten benefits of a living trust for you and your primary beneficiaries.
Trusts, such as the revocable living trust, pass outside of probate–sparing your beneficiaries the time, trouble, and expense of an often drawn-out probate process.
1. Adapt to Changing Situations
By definition, a revocable living trust can be modified to address changing life circumstances. A revocable living trust gives you the flexibility to add or remove assets from the trust while you are still alive. If a dramatic change in circumstances changes your estate plan, the trust can be modified or even dissolved.
You can create a trust now and make changes to it as your family grows and the value and presentation of your bequests change with a revocable living trust. The trust becomes irrevocable after death so that no more alterations can be made to the trust.
2. Keep Your Privacy
A living trust will remain a private family matter if you become incapacitated. Upon your passing, no declarations need to be put on paper to welcome potential creditors, document claims challenges to your will, or advise disappointed family members. Your recipients need not be disclosed.
When everything has to pass through probate, the public divulgence of your property, resources, and beneficiaries is inevitable. The best way to keep your estate assets private is to avoid probate when possible. In contrast to a will, a trust report can be kept private and permits the exchange of your resources without public divulgence.
3. You Keep Control
Your revocable living trust should contain directions for dealing with your resources and utilizing your assets in the event of your death or incapacity. As long as you remain capable, you have complete control of purchasing, using, spending, or giving away your property as you decide. You can sell property, change your recipients or legal administrator, or even repudiate the trust with proper estate planning legal counsel.
4. It Is More Affordable
Remember, probate expenses are a piece of the cost of settling your legacy with a will. While a trust may be more costly to create, it saves substantial expense after your passing by avoiding the costs associated with probate. Your Texas estate planning attorney can also advise you on how to structure the trust for tax savings. With careful planning, you can reduce or eliminate the costs associated with settling your estate with a well-crafted Revocable Living Trust.
5. Stay Away From the Courts
Any assets accumulated throughout your life become part of your estate when you die. With a valid will, the property is distributed to your heirs after the probate process. However, your estate must go through probate before any assets are distributed or transferred. Your will becomes public information, and your loved ones must appear in court, where the judge will decide whether the will is legitimate and authentic. Probate can be an extensive and costly interaction.
However, you can bypass the probate process by placing a substantial portion of your property into a revocable living trust. Many clients need a will in addition to a well-crafted trust. If you have both, the property held in the trust will remain out of probate, allowing it to reach the hands you intend it for faster and with less expense. One of many excellent reasons to have a revocable living trust is if you own property in more than one state. Having properties in multiple states without a trust can lead to a tedious, time-consuming, and expensive multi-state probate process. Your heirs will be left dealing with multiple attorneys and court systems to receive their inheritance.
6. A Chance to Organize Your Affairs
A secret advantage to meeting with a Texas estate planning attorney is that it gives you the motivation to go through your documents, records, and other things related to your assets. If you have any missing deeds, titles, or other important documents, you will have a chance to locate them or get replacements. This is a minor inconvenience now, but after your death, it can be extraordinarily trying for your beneficiaries to track down this information. Planning a living trust now allows you to ensure your affairs are in order.
7. Accommodate Minors
Before reaching the age of greater participation, minors are not allowed to acquire resources or property. A trust is a fantastic way to ensure your young beneficiaries are well taken care of. Your trust records can provide guidance on the proper ways to allocate resources to minors. It will be the responsibility of the legal administrator to see that your requests are fulfilled.
8. Helps Heirs With Unstable Financial Habits
A trust could be an efficient way to ensure that your friends and family are taken care of in the long run if they struggle to manage their money or if their income is undependable or dependent on a spouse or partner. A revocable lifetime trust can clearly define how assets are eventually distributed to your beneficiaries. Such clearly defined distribution methods can help protect your legacy and act as a protective measure for any beneficiary that may be vulnerable.
9. Consistent Asset Management Is Supported
To leave a financial legacy means you’ve worked hard your entire life and have an inheritance that you can leave to your primary beneficiaries. In most cases, you have probably collaborated with financial institutions or consultants to plan how your resources should be managed and given room to grow over time.
You can continue to manage your investments and other resources after they are placed in the trust. You can also specify that you want pre-determined financial administration to continue after your death. This would enable your assets to be managed and continue to grow after your death.
There is a false concept that estate planning is only for the wealthy. Not only is the concept untrue, but it impacts families when a family member dies intestate (without a will or other estate plan). Whether you are leaving a vast fortune or far more modest resources, there will be lasting impacts on your family if you fail to participate in estate planning.
Warren & Migliaccio is dedicated to improving the lives of North Texas families. Set up a consultation with us to learn more about revocable lifetime trusts and other estate planning tools.