What is a Revocable Living Trust?
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What is a Revocable Living Trust?
As Ambrose Bierce once darkly observed, “Death is not the end. There remains the litigation over the estate.” We recently discussed 3 reasons why you would want to avoid probate.
Obviously, ideally, when someone passes away, the paperwork and material concerns associated with the estate are so flawlessly handled (thanks to excellent preparation) that they fade into the background, allowing the family to grieve and remember in peace.
In fact, the whole business of estate planning – or at least a significant piece of it – is concerned with ease. How can assets and legacies be transferred to the next generation in a harmonious, stress-free, fair process?
To that end, one primary goal of many people is to avoid the complications and costs involved with probate.
There are many “tools of the trade” that we use to keep your assets out of probate – for example, establishing joint ownership on bank accounts and real estate titles, designating beneficiaries for life insurance policies and certain accounts, and so on. However, setting up a revocable living trust is quite often the best, most comprehensive option for avoiding probate. Let’s discuss why this is true.
What is a trust?
Often touted as an alternative to a will, a trust is a legal structure that permits management of your assets by a trustee on behalf of your beneficiaries. A living trust is established while you are still alive, as opposed to being created upon your death. You can be the trustee for your own living trust until you are no longer able to manage your financial affairs or pass away, at which point the responsibility for managing the trust passes to someone you designate as a successor trustee.
How does a trust help you avoid probate?
The purpose of probate is to transfer property ownership for all assets that were listed in your name when you passed away. A trust can bypass this process completely because your assets are transferred to the trust while you are still alive. Therefore, when you die, there’s nothing that needs to be transferred by the probate court (everything is already in your trust). Furthermore, a trust can cover virtually any type of asset, from real estate to vehicles to stock to bank accounts. When a trust is structured correctly with the help of an experienced estate planning attorney, your entire estate can stay out of probate court entirely. This process not only limits court costs, but it also maintains the privacy of your financial records while enabling your beneficiaries to enjoy the benefits of the trust without disruption or delay.
Establishing a trust can be a bit complicated, and the process can cost a bit more upfront than a will; however, if you’re willing to invest a little more up front, a trust can be your best option for avoiding probate later.
That said, as wonderful as revocable living trusts can be – and we’ve only scratched the surface of their exciting features in this short post – always bear in mind H.L. Mencken’s warning that “For every complex problem there is an answer that is clear, simple, and wrong.”
The key to planning effectively to minimize the likelihood of a drawn out, contentious, expensive process is to work with highly qualified, trusted people. Find a lawyer who genuinely cares about you and your family and who knows how to forge the right strategy for you and your family. Give me, Author, former Magistrate Judge, and Estate Planning Lawyer John P. Farrell, a call today at (678) 809-4922 for a free consultation and receive your free copy of my book, Estate Planning for the Modern Family: A Georgian’s Guide to Wills, Trusts, and Powers of Attorney to learn more about your next steps to get the peace of mind you deserve.