Many people come to my office asking whether or not they need a Revocable Living Trust. In reality, it is simply a matter of preference in many situations and this blog post points out some of the positive aspects of creating Revocable Living Trust
1 What is a Revocable Living Trust
A Revocable Living Trust is created during your lifetime. You may name yourself as Trustee of your own Trust. The Trust should then name successor Trustees in the event that you can no longer serve as Trustee because of incapacity, resignation, or death. The Trust is completely revocable and amendable during your lifetime as long as you are competent.
2 Benefit – Avoiding Probate
One positive aspect of creating a Revocable Living Trust is to avoid probate. You would re-title assets to your trust – such as bank accounts, real estate, etc. You would also change beneficiary forms to name your Trust as either primary or secondary beneficiary depending on your estate plan in whole (which should be discussed with an attorney). By re-titling assets and naming the Trust as beneficiary, these assets would pass outside of probate. By avoiding probate, you avoid the probate tax and other costs associated with filing accountings with the Commissioner of Accounts. At our office we also draft a “Pour-Over Will” which would state that any assets that you left outside of your Trust would go to your Trust at your death – thus, if any, only a few number of assets should be probated at your death if you did not move them into your Trust during your lifetime.
3 Benefit – Privacy
Another positive aspect of the Revocable Living Trust is privacy. When a will is probated, the will becomes a public record, as does a list of your assets in what is called an Inventory. By moving your assets into your Trust, you keep those assets private. Additionally, your Trust would not be a public record as it is not probated, so your desires in how you want your estate distributed at your death do not become a public record.
4 Benefit – Disability or Incompetency
By naming a successor Trustee of your Trust, you have already named who you want to take care of your assets that you have moved into your Trust in the case that you become unable to handle such assets. This, along with a Financial Power of Attorney, can avoid the possibility of court proceedings to appoint a Conservator for you in the future if necessary.
The main disadvantage to you is the cost and time upfront to you. Having an attorney draft a Revocable Living Trust does cost more than having a simple will drafted. However, it does save you the costs of probate, so it may even out in the end depending on the amount of your estate, or it may even cost you less to have the Trust drafted than to have your estate go through probate if you have a larger estate. Another possible disadvantage to you is all the possible paperwork involved in re-titling or changing beneficiary forms. You are essentially doing the paperwork that your Executor would have to do at your death. This may not be something you want to do and avoiding probate may not be of importance to you, so a simple will may be all you need and/or desire.
6 Consult with an Attorney
No matter what direction you decide you want to go, you should always consult with an estate planning attorney when drafting estate documents such as wills, trusts, medical directives, and financial powers of attorney. These documents are complex and in order to adequately meet your desires, an attorney should be used in all such circumstances. Contact us at our office to sit down to discuss your estate plan as a whole. Call our office at 703-658-6050 or email Rebecca Evans.