Why use revocable trust

Assets you place in the trust are then transferred to your designated beneficiaries upon your death. What sets a revocable living trust apart is that you can change or cancel the provisions at any time. You may also want to brush up on the basics of how trusts work.

Also, know that the exact laws governing trusts vary by state. The person who creates a trust is the trust-maker. You will also see the terms trustor and grantor. All three words refer to the same person. Typically, the trust-maker of a revocable living trust is also the trustee. The trustee is the person who handles administration of a trust — such as keeping track of income and tax returns. One thing that you will do in your trust documents is name a successor trustee.

This is the person who will manage the trust when you no longer can. The final term to know is beneficiaries. These are the people, organizations or other entities that will receive assets from your trust after your death. If you think that a revocable living trust is right for you, get ready. You will have to do most of the work upfront so that the dissemination of your estate is easier down the road. Start by taking an inventory of your assets.

Then, think about who you want to inherit your assets and who you can assign as trustee. Once the document is drawn up, transfer any property you want covered into the trust. If you are considering trusts, you will also want to compare irrevocable living trusts. One major advantage of a revocable living trust is that it is revocable. As mentioned earlier, that means you can alter or even void the trust whenever and however you want.

You can remain as the trustee and so you have the ability to make any and all decisions as you see fit. Now an important thing that I should write into this trust, is that I will be the trustee as long as I'm alive and have capacity to do so. I'm going to circle back to that in just a minute because that can make a tremendous bit of difference.

So let's go back to our presenter. Ok remember what our presenters say? First thing he told me was that I could avoid probate. Well I can, that's an accurate statement but who cares? Ok you care in some states, you care in some states because probate is expensive and it's time consuming. So what does that mean?

When I die with a will my personal representative, my executor, has to take my will down to court, go through all sorts of notice to other people, go through all sorts of signing, perhaps pay huge fees, in order to be to be the representative who can then manage my property. So again, in it in a state where probate is expensive and time-consuming, if you've already gone to an estate planner, that's probably what your estate planner has recommended as your major document.

Ok so avoiding probate. That's a good accurate description. Second thing, privacy. Remember the presenter said I could retain my privacy with this trust. And that's right too, because if I have a will and it goes down the probate court it gets filed and becomes public record, so anybody who wants to can come and check to see what I did with my property.

If I have that trust on the other hand my son doesn't have to show it to anybody, so it is private. So check. That's going to work. Avoid taxes. No, don't let anybody sell you on that concept. The IRS's attitude is, I don't care what you call yourself you have control over that money. That's your property for tax purposes while you're alive and when you die. Ok so that was not a good representation. Avoiding creditors. Most states, no that is not going to work.

That's not going to work even if you have for example a huge nursing home bill when you die. This trust is not going to be able to avoid the payment of that bill. How Revocable Trusts Work A revocable trust is created when an individual the grantor signs a trust agreement naming a person s , a corporation trust company or bank or both as trustee to administer the trust.

Advantages of Revocable Trusts Continuity of Management During Disability Creating a revocable trust is probably the best way to ensure that your property remains available to be used for your benefit, should you become physically or mentally incapable of managing your own affairs.

Flexibility Using a funded revocable trust may allow you to name unrelated, out-of-state individuals and out-of-state trust companies to act as the primary administrator of your property at death.

Avoidance of Probate Probate is the legal process required to determine that a will is valid. Lost or Destroyed Originals When offering a will for probate, all original wills must be provided to avoid a presumption that the will was revoked. Disadvantages of Revocable Trusts There are a few disadvantages that may apply to using a revocable trust instead of a will. Reregistration of Property As noted, in order to be included in a revocable trust, property must be reregistered in the name of the trust.

May Not Automatically Adapt to Changed Circumstances In many jurisdictions, wills change automatically upon divorce, marriage or the birth of a child. Conclusion The primary benefit of creating a revocable trust is that it provides a prearranged mechanism that will ensure the continued management and preservation of your assets, should you become disabled.

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This is particularly important if you have minor children. No custodian will make a distribution from an IRA or k directly to a minor beneficiary. The court will need to be involved.

This can be averted by having a properly structured trust with conduit provisions so that you can list your trust as the contingent beneficiary behind your spouse.

Asset protection for the surviving spouse.