Revocable Living Trust
What is Revocable Living Trust?
A revocable living trust is a legal arrangement that allows an individual, known as the grantor or settlor, to transfer their assets into a trust during their lifetime. The grantor retains control over the assets and can make changes or revoke the trust at any time as long as they are mentally competent. It is called a "living" trust because it is established and takes effect during the grantor's lifetime.
Here are some key features and benefits of a revocable living trust:
Asset Management: By placing assets into the trust, the grantor retains control as the trustee, managing and using the assets as they would if they were still personally owned. This provides flexibility and continuity in managing one's assets.
Avoiding Probate: One of the primary advantages of a revocable living trust is the ability to bypass the probate process. Probate is a legal process in which a court oversees the distribution of a deceased person's assets. Assets held in a living trust can generally pass directly to the designated beneficiaries without going through probate, which can be time-consuming and costly.
Privacy: Unlike a will, which becomes a public record when it goes through probate, a living trust allows for greater privacy. The distribution of assets and the details of the trust remain confidential.
Incapacity Planning: A revocable living trust includes provisions for the management of assets in the event the grantor becomes incapacitated or unable to handle their affairs. It can specify successor trustees who will step in to manage the trust without the need for court intervention.
Flexibility and Amendment: As the grantor, you can make changes to the trust, add or remove assets, amend provisions, or revoke the trust entirely if your circumstances or wishes change.
Potential Tax Planning: While a revocable living trust does not provide direct tax benefits, it can be used as part of a comprehensive estate plan to help minimize estate taxes or provide for tax-efficient wealth transfer strategies. You should consult with a tax advisor or estate planning attorney to understand the tax implications specific to your situation.
It's important to note that a revocable living trust does not provide asset protection from creditors or potential lawsuits during the grantor's lifetime. Additionally, certain assets, such as retirement accounts, may need to be structured differently within the trust to maintain their tax advantages.
Establishing a revocable living trust typically requires the assistance of an experienced estate planning attorney who can help draft the trust document, transfer assets into the trust, and ensure that it complies with relevant state laws.
Let’s Work Together
Get in touch so we can start working together.