What will happen to your loved ones, your beneficiaries, when you have passed away? How will they manage their inheritance? Often times, leaving behind a large sum of money to someone without money management skills can be disastrous. A revocable living trust will afford you the ability to make things easier on your survivors, including eliminating costly asset distribution. It is also much more expedient than having to go through the probate that is often required with a basic will.
The revocable living trust is an arrangement where you transfer ownership of your property during the course of your life into a trust. Unlike a will that only comes into play after your death, you can start benefiting from the living trust right now. Because the trust is revocable, you are able to change it at any time, for any reason.
A revocable living trust is established through a declaration or written agreement and you’ll appoint a trustee to manage and administer the property. Usually the person creating the trust is their own trustee. Provided that you are an adult with your mental faculties intact, you are eligible to establish a revocable living trust. The trust is the guide on what will happen to your assets after you have passed away.
There are of course advantages and disadvantages to a Living Trust. One huge advantage is that your heirs are able to legally avoid probate proceedings which can be expensive and time consuming. The living trust is revocable and can be amended at any time. Your personal assets and information remain private within the trust document while in probate, your estate is exposed to public record. You virtually eliminate challenges to the estate that often arise in family disputes. You may even disinherit anyone who challenges the trust upon your passing. Additionally, you may be able to easily segregate your assets – this becomes necessary when a married couple may have held substantial separate property (as separate individuals) before the marriage. A revocable living trust can also provide protection for surviving spouses and other heirs from creditors and potential divorces.
The revocable living trust is a strategy that many will find the perfect solution, but it is not a blanket solution for everyone. As with all your asset protection and planning, you should discuss your options with a qualified estate planning firm.