 |
The term revocable living trust is generally used to describe a trust (a) which you
can create during your lifetime, and (b) which you can revoke or amend whenever
you wish to do so.
The main purpose of a revocable living trust is to
avoid probate while also providing a method of distributing your assets after death.
While a will can direct the probate court on how to administer the estate, this
process is expensive, costing upwards of 6%-10% of your total estate's value. A
valid revocable living trust avoids the probate process altogether by removing
your assets from your estate at the time of death under State Law. While a
will is useful in directing the court in administering your wishes, a valid and
comprehensive trust is superior by generally avoiding this process completely.
|
|
|
|
|
A revocable living trust can benefit you in other ways as well. This
technique allows you to control your assets while you are alive and still
directs the distribution of your assets according to your wishes after death. It
also allows you to specify the individual or entity who will manage your assets
for you if you become incapacitated or to administer these assets after death. By
avoiding probate, a trust can also allow you to maintain your financial privacy.
The probate process, whether directed by a will or not, is not private and can
be viewed by anyone.
It is important to note that although a revocable living trust does not have
inherent estate tax benefits, it can play a vital role in more advanced tax
planning solutions. For example, by utilizing a classification of revocable
living trusts called formula trusts (generally AB Trusts,
or Q-TIP Trusts), you can use tax exemptions allowed to
married people to significantly reduce or eliminate estate taxes.
|
|
|
|
While revocable living trusts are extremely important, like any other tool,
they need to be used correctly and in conjunction with other techniques in
order to maximize their benefit. This includes both:
-
Correctly titling your assets to
include them in the trust, and
-
Implementing a plan which includes
a pour-over will and a durable power of attorney.
Our basic plan not only provides
you with these other techniques, but also assists you by titling your primary
residence into the trust.
|
|
|
|
|
|
