Revocable living trusts are estate planning tools that have become very popular in recent years mostly because of the financial advantages they offer. A trust is a vehicle in which property is held for the benefit of another person. A living or inter vivos trust is one created during an individual’s lifetime as opposed to upon their death. A trust is revocable when the grantor (creator of the trust) has the freedom to change the trust terms throughout their life. Assets held by the trust are managed by an individual, known as the trustee, who is appointed by the grantor.
There are many benefits to the use of a revocable living trust in your estate plan. Although you should always speak to a qualified attorney before creating a trust to ensure that it is drafted correctly, some of the advantages are as follows.
Revocable living trusts avoid probate. Probate is the legal process by which a last will and testament is validated. Assets held in a revocable living trust pass immediately to beneficiaries upon the grantors death. By passing your assets via a revocable living trust instead of a will, you can avoid the costly and lengthy probate process. In the case that you own property in more than one state and hand down your assets by will, ancillary probate will be necessary. Ancillary probate is the process of validating a will in another state where property is owned. This can be even more expensive and time consuming than the standard probate process. Using a revocable living trust to distribute these out of state assets will also eliminate the need for ancillary probate, saving your heirs time and money.
This type of trust offers the grantor a large amount of control over their assets throughout their life. By naming themselves as trustee, the grantor can manage the assets in the trust as long as they are competent, enabling them to make financial decisions that will grow their wealth over time.
A revocable living trust also enables the grantor to appoint a co-trustee that will manage the trust assets in the event that the grantor trustee becomes incompetent. If you have not designated someone to handle these affairs via a revocable living trust or another method, a conservatorship proceeding could be necessary. These proceedings are also quite expensive and can be avoided by the use of a revocable living trust, preserving money for your heirs.
If you are interested in the financial advantages of a revocable living trust, call Brian Chew at (949)347-5256.