A revocable living trust is an important estate planning tool that can help you and your family manage your assets during your lifetime and after you pass away. It is a legal document that allows you to establish the ownership of your assets, appoint trustees and beneficiaries, and provide instructions for how those assets should be handled in the event of your death or incapacity. Here, we will take a look at what exactly a revocable living trust is and why it might be (probably is) right for you.
What Is a Revocable Living Trust?
A revocable living trust is an estate planning document that allows you to manage how your assets will be distributed after you die or how they are managed if you become incapacitated. The trust also gives you control over who gets your assets from your estate when it passes on to them. You can also specify particular conditions under which assets can be distributed or withheld from certain beneficiaries. Such as if you have underaged children and want to be sure they don't blow your hard-earned wealth upon reaching 18 on a lambo. The main advantage of a revocable living trust is that it avoids probate court for your heirs (if done correctly), and avoids costs, delays, and public disclosure of the details of your estate distribution plan.
Benefits of Setting Up a Revocable Living Trust
Setting up a revocable living trust has several benefits, including:
• More control over asset distribution –
With a revocable living trust, you have more control over how your assets are distributed than with other estate planning methods. You can choose who gets what and when they receive it. You can also include conditions in the trust agreement concerning how the money must be used by the beneficiary. Such as, a certain percentage is only allocated at age 18 for school expenses, another percentage is given at age 25 for furthering education or for use on the purchase of a house, and the rest is distributed at age 35. These are some examples of how you have control over your estate from beyond the grave!
• Avoidance of probate court –
When setting up a revocable living trust, all of your assets will be transferred into the name of the trust rather than held in individual accounts in your name, or the trust is listed as the designated beneficiary upon your death; this means that those transferred assets will not go through probate court upon death or guardianship upon incapacity. This saves time and money because there are no court fees or paperwork involved in administering the trust's assets outside of probate court proceedings.
• Private asset distribution –
Unlike other forms of estate planning such as with a Will (which becomes public documents), trusts are private agreements between two parties (the Grantor/Trustee and Beneficiary). This means that all details about how the assets are to be distributed remain confidential between those two parties only. With a Will, your heirs will have to go through probate and the Will is "lodged" with the Court. That becomes public record, which means anyone can go down to the court and read your Will and also the contents of your probate filings (which include lists of assets, debts, heirs, and distribution). So having a trust can provide additional peace of mind by setting up the trust agreement in that a person's personal business and life remain private.
A revocable living trust offers many advantages over traditional estate planning methods such as having just a will or worse, nothing at all. A trust provides more control over asset distribution, avoidance of probate court costs and delays, and keeping your personal business private. This makes it an attractive option for anyone looking to ensure their wishes regarding their estate are carried out after they pass away or become incapacitated.
We make it even easier to get Your Estate Plan in place with our DIY Your Estate Plan package. If you're considering setting up a revocable living trust as part of your overall estate plan, take our estate planning plan quiz to see what option is best for you today!