What is a Revocable Living Trust?
There are many kinds of trusts, but the one that is most commonly used in estate planning is the “revocable living trust” (also called a “living trust”). A revocable living trust is similar to a Will in that it directs where property goes after death, but the advantage of a trust is that it gets to completely skip the probate process. A revocable living trust is created when a person signs a trust agreement and transfers all or some of his or her assets to the trust. Putting assets into a trust is called “funding the trust.” People who create and fund a trust are called “grantors.” A trust must also have one or more “trustees” to manage the trust, who might initially also be the grantors. Successor trustees should also be named to manage the trust after the initial trustees die or resign.
A revocable living trust has the benefits of (1) simplifying the probate process, especially for a person who owns real estate in more than one state; (2) potentially saving money on legal fees and probate costs; (3) allowing for easier property management if the grantors of the trust become incapacitated; and (4) avoiding having all the details about the grantors’ estate being filed as a public record (as is done with a Will).
Despite these benefits, not everyone is best served by a revocable living trust because of the extra cost and administrative burden involved. An estate plan that includes a trust will usually cost more to prepare. Also, a trust is not effective unless it is properly funded by transferring the grantors’ assets into it before death. An unfunded trust has very little usefulness, if any. Unfortunately, some attorneys are content to collect a fee for drafting a revocable living trust, and then fail to follow up with the client to ensure the trust is properly funded.
If you think a revocable living trust might be beneficial for you and your family, it is essential to meet with a qualified estate planning attorney. If you wish, we would be glad to discuss a revocable living trust with you, and prepare your trust if it is in your best interest to do so. We also can provide whatever support you need to fund your trust and ensure all the administrative details are properly handled. Let us know how we can serve you!