Should i do a revocable trust

In such cases, however, a co-trustee should also be named in order to ensure continuity of management in the event of death or disability. In most cases, the grantor retains certain rights over the trust during his or her lifetime. These generally include the right to instruct the trustee to distribute all or any portion of the trust property, as the grantor desires, and the right to change or revoke the trust at any time. When a grantor dies, the trust acts like a will, and the property is distributed to the beneficiaries as directed by the trust agreement.

This ensures continuity of asset management and financial support of the grantor, should he or she become disabled. However, funding a trust at death does not avoid the necessity of probate.

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.

While continuity of management is also possible when a durable power of attorney is signed, third parties such as banks, brokers and transfer agents often have more difficulty in dealing with a power of attorney than with a trust agreement. And, if the designated attorney-in-fact is unable to act, the power of attorney may not be usable. If you become disabled and you have neither a revocable trust nor a power of attorney, an expensive, lengthy, and potentially embarrassing court proceeding is generally required to appoint a conservator or guardian before your property can be used to benefit either you or your family.

Even after a guardian has been named, continued court supervision over the management of investments and disbursements is usually required. This can include annual bond fees, annual accounts and additional legal and accounting fees. 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.

Without a trust, many jurisdictions limit your flexibility in this regard. Also, it is usually easier to make amendments to a revocable trust than to a will. Probate is the legal process required to determine that a will is valid. Because probate can be costly and time consuming, the avoidance of probate is often cited as one of the primary benefits of a revocable trust. The extent of this benefit may vary from one place to the next.

For example, avoiding probate may be a significant benefit if you own real estate in more than one state, because you avoid multiple probate proceedings. When offering a will for probate, all original wills must be provided to avoid a presumption that the will was revoked. Typically only one original must be produced at death. Since revocable trusts are not probated, multiple originals may be signed and one original may validate transferred property held in the trust at death.

Having a revocable trust, therefore, may simplify the transfer of property at death if the original will cannot be located or has been destroyed. There are a few disadvantages that may apply to using a revocable trust instead of a will. In my experience, most people delay or avoid preparing and updating estate planning documents.

That's understandable, since facing our own mortality puts us in a less warm, comfortable place than remaining in blissful denial.

My wish for you, though, is that you do face your mortality and hire a specialized estate planning attorney to help prepare for the ramifications of this inescapable truth. In the estate planning and attorney world, that means creating a will or a revocable living trust. Preparing a will is a time-honored and extremely common method of communicating your preferences for distributing assets after death.

If the will says your daughter gets this, your church gets that and your son gets nothing, that's what will probably happen — but not always. Beneficiary designations on individual retirement accounts, annuity accounts and insurance policies override what the will says.

In addition, community property and elective-share laws may mean a spouse receives a share of the estate — or a bigger share — even if the will disagrees. State laws vary, so it's important to understand your state's policies. A revocable living trust, or RLT, on the other hand, is one of many types of trusts.

The "living" aspect refers to the fact that the trust is created while you're still alive as opposed to a testamentary trust. You still control the assets until you die even though, technically speaking, the trust owns them.

And what about those five reasons mentioned in the title? An RLT offers several major advantages over a will:. Avoiding probate: A funded living trust passes to named beneficiaries without going through the probate process, even if property owned by the trust is in another state.

This allows the estate to be settled quickly. But there's an important caveat: To successfully avoid probate, all relevant assets must be retitled in the trust's name, transferring ownership to the trust. Probatable assets include brokerage accounts non-IRA , real estate, cars and privately held stock — anything with a beneficiary designation or joint title.

I frequently see beautifully written RLTs, but the person never funded them or updated beneficiary designations. In that situation, you might as well have not bothered spending the time and money required to establish the trust. Maintaining privacy: The terms of a trust are private, whereas wills become part of the public record. As with all living trusts , you create it during your lifetime. 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. If you decide that you no longer want to give assets to a specific beneficiary, you can remove that beneficiary.

This is the opposite of an irrevocable living trust. With an irrevocable living trust, you cannot modify or terminate the trust without approval from everyone named in the trust. If you want to remove a beneficiary from an irrevocable trust, that beneficiary needs to agree and sign off. The reason for this inflexibility is that as soon as the trustmaker signs the documents for an irrevocable living trust, he or she removes all ownership rights to the assets.

Another important difference between revocable and irrevocable trusts comes with taxes.