There are those who harbor misconceptions when it comes to estate planning. One of these is the notion that trusts are only useful for wealthy people.
It is true that certain types of trusts are used by those who could be described as wealthy. However, revocable living trusts are useful for people of relatively ordinary means. In fact, this type of trust would not be the right choice for wealthy people who are exposed to the estate tax.
Value of Revocable Living Trusts
The main reason why you may want to consider the creation of a revocable living trust would be to avoid probate. Probate is the legal process of estate administration. When you use a last will to state your final wishes, the will must be admitted to probate.
During probate the court will supervise the administration of the estate.
Probate provides certain protections, but it can be time-consuming and expensive. If you want your heirs to receive their inheritances in a timely manner, you may want to consider probate avoidance strategies.
When you create a revocable living trust you name a trustee to administer the trust after you die. You also name a beneficiary or beneficiaries who will receive monetary distributions out of the trust after your death.
These distributions are made by the trustee in accordance with your wishes. You state these wishes in the trust agreement when you create the trust.
Distributions of monetary resources made by the trustee to the beneficiaries are not subject to the probate process.
With a revocable living trust you do not surrender control of the assets that you convey into it. While you are living you can act as the trustee and the beneficiary. You name successors to assume these roles after you die.
The trust is in fact revocable. You can dissolve or revoke the vehicle at any time, and the assets that you convey into it are once again your personal property.
There is also the matter of future incapacity. When you create the trust you name a disability trustee. If you were to become incapacitated and unable to handle your own financial affairs, this trustee could step in to act on your behalf to administer the trust.
This incapacity planning component is another one of the benefits.
Learn More About Living Trusts
If you would like to learn more about revocable living trusts, download our special report on the subject. This report examines living trusts in detail, and you can access the download absolutely free of charge.
To get your copy of the report click this link and follow the simple instructions: Free Report on Living Trusts.
You have options when you are planning your estate. You should become apprised of all of them before you make any final decisions.
- 2023 Caring.com Survey Reveals Widespread Estate Planning Unpreparedness - May 18, 2023
- Secrets and Intrigue: A Look at Five Unusual Trusts - May 2, 2023
- Are Living Trust Distributions Taxable? - April 13, 2023