Estate planning can be an intimidating process, but it is an essential aspect of financial planning that everyone should consider. One popular tool for estate planning is a revocable living trust. In this blog post, we will discuss the basics of what a revocable living trust is and how it can benefit you.
What is a revocable living trust?
A revocable living trust is a legal agreement between the person who creates the trust (the settlor or grantor) and a trustee who manages the assets held within the trust. The grantor can also be the trustee, which means they can manage their assets within the trust during their lifetime. The trust can be revoked or changed during the grantor’s lifetime, and it becomes irrevocable after their death.
How does it work?
To create a revocable living trust, the grantor transfers their assets, such as their home, bank accounts, and investments, into the trust. Once the assets are transferred, the grantor can still use and control them as they did before. However, they no longer legally own them; instead, the trust owns them.
When the grantor dies, the trust assets are distributed according to their wishes, as outlined in the trust document. The assets in the trust do not go through probate, which is the court-supervised process of distributing a person’s assets after their death. This can save time and money for the grantor’s beneficiaries.
Benefits of a revocable living trust
Some benefits of using a revocable living trust include (but are not limited to):
- Avoiding probate: As mentioned earlier, assets held in a revocable living trust do not go through probate, which can be time-consuming and expensive.
- Privacy: The distribution of assets through a trust is a private matter, unlike probate, which is a public process.
- Flexibility: The grantor can change the trust’s terms at any time during their lifetime.
- Control: The grantor retains control of their assets during their lifetime, even though the trust owns them.
- Protection: A revocable living trust may protect assets from creditors or lawsuits (but talk to a lawyer about your specific situation).
- Incapacity planning: If the grantor becomes incapacitated, the trustee can manage the assets held in the trust on their behalf, avoiding the need for a court-appointed conservator.
A revocable living trust is a valuable estate planning tool that can help you avoid probate, protect your assets, and ensure your wishes are followed after your death. It provides flexibility and control during your lifetime while also simplifying the distribution of your assets after you die. If you’re considering creating a revocable living trust, it’s important to work with an experienced estate planning attorney to ensure it meets your specific needs and goals.
If you have questions regarding estate planning contact Chapman Law, PLLC to discuss your situation.
This blog is intended to provide general information and, therefore, should not be treated as legal advice. You should contact a qualified attorney for questions about legal issues.