Revocable Living Trusts Explained

If you find yourself worrying that the beneficiaries of your estate might not do a great job managing the inheritance or you want to ensure they avoid the time and cost of probate, you should consider setting up a revocable living trust. A revocable living trust gives you the option to still have full control over your estate during your lifetime. The assets included in this type of trust can be real estate, bank accounts, investments, heirlooms, and other valuable possessions.

What Is a Revocable Living Trust?

A revocable living trust makes it possible for an individual to change or cancel the trust at any time. The main use for living trusts is to avoid probate and to protect the privacy of the trust owner while also minimizing estate taxes. A living trust is set up by a written agreement that is used to appoint a trustee who will manage and administer the estate of the grantor. You can choose any competent adult as the trustee, but it’s worth mentioning that you can also appoint a bank or company to serve as a trustee.

Why Should You Choose a Revocable Living Trust Over a Will?

As the name implies, the most significant benefit of choosing to create a revocable living trust is that you can alter or even void it. You will remain the designated trustee and have complete control over how your assets are managed. For example, you can choose to remove a beneficiary from the inheritance list at any time. This is not possible with a regular Last Will and Testament without properly executing a formal Codicil.

Another advantage of choosing a revocable living trust is the ability to modify the documents according to your wishes. You will not have to receive approval from the beneficiaries. Therefore, signing an irrevocable trust is basically giving up all ownership rights over your assets. It’s important to mention that creating a revocable living trust will minimize taxes on your estate.

If privacy is important to you and your beneficiaries, you should be pleased to know that your assets will be distributed privately in a revocable trust. For comparison, all wills require the transactions to be entered into the public record. If you choose to create a revocable living trust, you can rest assured knowing that no one can search public records and find out what assets your beneficiaries inherited. As a result, the people who receive your assets will be safe.

Final Thoughts

When comparing revocable living trusts to wills, the main outlier is the increased control over asset distribution. The most important advantage you get is the ability to remove any beneficiaries from the inheritance list. However, revocable trusts also avoid probate, provide more privacy, and help minimize taxes on the estate. Although living trusts aren’t a must for everyone, they can certainly serve individuals well. The ideal estate plan is the one that works with your unique needs and fulfills your wishes. Thank you again for trusting As Your Counsel Legal Services.