If you are worried about how a beneficiary will be managing his or her inheritance after you pass away, you may want to consider creating a trust document that could be changed over time. Such can help the trust owner and beneficiaries avoid probate, reduce estate taxes, and keep their privacy. With the help of an experienced estate planning attorney, you can start drafting a living trust that can be revoked.
What is a revocable living trust?
This legal document is in sharp contrast with a testamentary trust. This living trust allows grantors to appoint a trustee, who shall be tasked with managing and administering trust assets. Trustees here could be the person setting up the said estate plan. It could be a specific family member, a bank, or a trusted company. Any bank account, personal property, or real property held in trust belongs not (anymore) to the grantor naming the trustee, but to the trust itself. The way property in trust would be managed when you die can also be specified by these estate planning documents.
Revocable trusts, however, have certain disadvantages, especially when compared to an irrevocable trust. These will be the focus of this article.
Avoiding Probate Proceedings
Transferring assets of the deceased person through the probate court is not easy. It involves a lot of estate planning documents that supposed heirs have to deal with. Since trust property is owned not by the decedent but by the trust, they are not probated after death. Beneficiaries of the trust can be spared from such trouble.
Expenses Related to Setting Up Such a Legal Document
Compared to a last will and testament, establishing a trust (that you can revoke, for instance) can be a bit more expensive. However, since you are, in essence, preventing your surviving spouse or any loved one from having to worry about probate costs, such can still be more advantageous.
What a Living Trust Will Allow You to Do While Still Alive
A living trust you create may be amended or revoked throughout the remainder of your life. The income of estate assets, although taxable, will not be transferred to any beneficiary of a trust during your lifetime. As in relevant state law, they are yours until you are deceased.
How to Protect Assets When You Decide to Set Up a Trust
When looking into specifics of trust law, one can see that there is relatively less asset protection that comes with revocable living trusts. This is particularly true if a person creates trust and decides to designate himself or herself as the trustee.
Retitling of Property to the Revocable Trust
Property in a trust will have to be retitled and put in the name of the trust. This can take extra time and additional expenses. A married couple, however, could benefit from this because trust documents can segregate community property from other property that is not marital in nature.
Things That Must Be Done After One Created a Trust
The revocable living trust you drafted involves the maintenance of trust records and books. The trust must be monitored annually and adjustments must be made when necessary. In the case of new circumstances, such as the birth of a child or a divorce, whatever is held in a trust will not automatically adapt. Someone must make sure that assets are registered, including future ones.
Living Wills as a Good Estate Planning Tool
When you create a trust, you can appoint a trustee who could make decisions for you (in case you become incapacitated) even without a durable power of attorney. Appointing a trustee to manage your trust estate can help it keep on growing. Furthermore, when you establish a trust, a credit shelter trust can be set up after you pass away, which minimizes estate taxes.
Proceeding with your plan to create a trust can be very helpful for your trust beneficiary, which could be your would-be surviving spouse, children, or even grandchildren, among others. Setting up a trust can address guardianship and help them avoid the probate process. They can make the most out of the advantages stated above.
For questions on a revocable or irrevocable living trust, the different types of trusts, wills, and trusts, or estate administration, contact a competent law firm. Consult a reliable estate planning lawyer at Gravis Law. Call 801-516-3186 for an initial consultation.