Setting the Stage
It happens all the time. You’re working on your computer and a family member or co-worker casually watching over your shoulder shows you a shortcut key that could have reduced your last two minutes to two seconds. You go to the grocery store and know exactly where to find the cereal and pork chops. But your wife has added Napa cabbage to the list this time, and your 10-minute visit turns into a scavenger hunt.
From the vehicle we drive to the bank accounts we choose, each of us has product and service usage habits that largely fall within our comfort zone. While that saves time in the short run, over the long term what we don’t know can cost us time – and money.
That’s why we’ve dedicated this report to reminding you that even though you may be currently employing specific financial management services, you might not have considered (or optimized) one that could be very useful to you: a revocable living trust.
What It Is and What It Does
A revocable living trust answers the doorbell for many individuals and families because it can help you transfer assets in three important areas:
The primary purpose of this type of trust is to distribute assets to the beneficiaries of the trust as prescribed by the Grantor, which is the person who established it. We all know that life can change dramatically and quickly, and a revocable living trust can be amended, added to, or revoked at any juncture during the Grantor’s competent lifetime. A second marriage, a blended family, an ownership change in the family business are just a few examples of the triggering events that make this type of trust useful, because you have the flexibility to make changes as your situation changes.
In addition, a revocable living trust affords the Grantor the freedom to transfer management of the assets in the trust to a professional third party who can do everything from paying the bills to managing the investments.
A well-planned and executed will and revocable living trust working together can help minimize, or in some cases eliminate, probate which is attractive because:
- While revocable living trusts are flexible, the formal probate process affords minimal flexibility. The law is the law.
- While revocable living trusts are private, probate is a matter of public record, which many families find undesirable.
- Probate can be a slow process. Depending on state law, the complexity of the estate and the organization, and accuracy of the information needed, probate can take from just a few months to a few years. Having assets in a revocable living trust can help expedite that process.
The general premise here is that by moving assets from your ownership to your revocable living trust, those assets are effectively removed from your estate. So in addition to avoiding probate, as we just mentioned, those assets get passed on without adding to your tab to Uncle Sam.
As hopeful as we all might be that inheritance tax relief will continue to improve, there’s no certainty that will happen, so reducing your taxable estate is prudent and sensible.
A revocable living trust is one of the most effective estate management tools available.
An experienced Trust professional can help you identify and determine the ways this trust can benefit you. And, help you explore additional options to manage and transfer assets safely and effectively to achieve the outcomes you want.