Revocable Living Trust Estate Panning
Revocable living trusts are a popular estate-planning tool that you can use to determine who gets your property after you pass. Most trusts are “revocable” because you can change them as your circumstances or wishes change during your lifetime. A revocable living trust can be used as a substitute to your will as it will become the primary document directing the administration and distribution of your assets.
When a revocable living trust replaces your will the trust accomplishes many of the same goals outlined in our discussion on last will and testament. Assets named in the trust pass to the beneficiaries of the trust upon the death of the grantor of the trust. The grantor retains the right to access the trust assets throughout his or her life. In our experience, the primary reason people select the revocable trust instrument is to avoid costs and delays associated with the probate process.
In many instances, we see the revocable trust instrument as a neutral solution. As long as you are vigilant in keeping all of the assets in the revocable trust throughout your life, upon death, your assets will pass through the trust avoiding the probate process. Too often, we see people establish revocable trusts and fail to make sure all of their assets are transferred into the trust. Upon death, a probate proceeding is then required, undermining the goals established at the outset of the estate planning process.
Advantages of creating a revocable trust include:
- Avoiding estate administration in multiple jurisdictions if, for example, a person owns property in more than one state
- Making it more difficult for a child, spouse or other beneficiary to contest the distributive scheme set forth in the trust
- Maintaining privacy as to the assets, beneficiaries and terms of distribution
- Reducing some of the costs associated with administering an estate–this cost is generally not as high as some trust advocates imply
- Providing a mechanism for managing assets during your lifetime if you become disabled or unable to manage your financial affairs. Here the revocable trust becomes the primary administration document instead of the power of attorney. Use of a revocable trust is essential if you select an institution, such as a bank or trust company, to succeed you in managing your financial affairs. An institution will not serve as agent under a power of attorney, but will serve as trustee of a trust.
Some of the disadvantages of a revocable trust include:
- The costs of establishing a revocable trust compared to less expensive alternatives
- The costs associated with transferring all the assets into the trust
- The requirement that all existing assets remain in the trust and that all newly acquired assets are transferred into the trust
- The practical challenges of becoming accustomed to operating or managing your assets as a trustee, instead of as an individual
- To the extent you establish a trust with unrealistic expectations as to what it accomplishes, you may actually be missing more important estate planning opportunities and strategies to protect and save assets for your intended beneficiaries
Contact the lawyers at Lacy Katzen to discuss estate planning and revocable trusts and living trusts to ensure your family and legal and financial matters are handled properly at 585.454.5650.
Related Practice Areas
- Transfer on Death Accounts
- Pre-Nuptial & Post-Nuptial Agreements
- Last Will and Testament Estate Planning
- Special Needs & Supplemental Trust Planning
- Revocable Living Trust Estate Panning
- Standby Guardianships
- Planning & Designating Durable Power of Attorney
- Organ & Body Donation
- Irrevocable Trust
- Irrevocable Medicaid Trusts
- Irrevocable Life Insurance Trusts & Crummey Trusts
- Living Wills & Health Care Proxies
- Guardianship Family Law
- Estate, Gift & Income Tax Analysis
- Disability Planning
- Charitable Gifts, Bequests & Trusts
- Beneficiary Designation
- Why Do I Need Estate Planning?