Revocable Living Trust/Revocable Trust:
These may seem like big scary documents, but what they can do is truly amazing. As mysterious as they are, the cost and time it takes to put into place a properly drafted and funded trust can avoid the need for court when your time is up. The right plan will save your family thousands of dollars and months of frustration dealing with court when they should be celebrating your life, not cursing the court system.
Wondering how to do it? There is one solution that allows you to control over the property when they are not there. It is done with a revocable living trust also known as a revocable trust.
The Key Points:
A revocable trust is a legal document set up by an estate planning attorney with you as the “trustor” or “grantor”. You are the trustor because you have the assets to put into the trust. You are also the initial trustee who manages the assets in the trust. Finally, you are the beneficiary of the trust, meaning you get to use the assets as you wish with no restrictions. Keep these definitions in mind for the rest of this page.
It is revocable because it can be changed any time. These are used to avoid probate and keep your privacy. After the trustor dies, the revocable trust also provides asset protection for the beneficiaries. This means, your assets can be kept safe in case one of your beneficiaries has a creditor issue.
In addition, it allows the trustor to determine when a beneficiary will receive a certain portion of the assets. For instance, say you want your children to be financially cared for for a certain number of years, you determine what age they receive the bulk of your assets.
Revocable Trust- Creation:
The trust is created by writing an agreement that legally appoints a successor trustee to look after and administer the trust after the initial trustee (usually the trustor) dies. As a creator of the document, you can choose any competent person as the trustee. Some people prefer to select a company as the successor trustee.
After you have chosen the trustee and have named the beneficiaries, the next step is correctly placing assets including bank accounts, investments, and real estate into the trust. After this, the assets belong to the trust, which lives beyond your death. Thus avoiding the probate process after the death of the trustor. To put in simple words, a trust is a rule book for how to manage and transfer the assets and avoid probate.
Benefits of Revocable Living Trust:
The avoidance of probate is the major advantage of establishing a good and legal revocable trust. But there are some benefits like protection of privacy and flexibility makes a revocable trust an ideal choice.
● Eliminate Probate- it is a simple process of transferring property when the trustor dies which speeds up the process instead of taking months or even years of probate.
● Flexible in nature- you can change the trust document whenever you want
● Protect privacy- if you want to keep all your asset data private, a revocable trust is a great option. Even after your death, nothing will be revealed as it would be in probate.