Revocable Living Trust – The Trust Everyone Can Use

 

From the vehicle we drive, picking out what’s for dinner, and the bank accounts we choose, we use products and services that fall in 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.

And when it comes to your estate planning, you and your family need to use the best tools available. You need a system that is flexible for your needs, secure, and financially beneficial, like a revocable living trust.
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What It Is and What It Does

A living trust can help you manage your assets or protect you should you become ill, disabled, or challenged by the symptoms of aging. The term “living trust” typically describes a trust created during your lifetime. Most living trusts are written to permit you to revoke or amend them whenever you wish to do so.

A revocable living trust is practical for many individuals and families because it transfers assets in three crucial areas: control, probate, and taxes.

1. Control

The primary purpose of this type of Trust is to distribute assets to the beneficiaries of the Trust as prescribed by the Grantor, who is the person that established it.

We all know that life can change dramatically and quickly. 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, or an ownership change in the family business are a few trigger events that make this Trust useful. You have the flexibility to make changes as your situation changes.

A revocable living trust also affords the Grantor the freedom to transfer management of the assets in the Trust to a professional third party. This third party can do everything from paying the bills to managing the investments.

2. Probate

Probate is the examination and transfer administration of estate assets previously owned by a deceased person. A well-planned and executed will and revocable living trust working together can help minimize or, in some cases, eliminate probate. This is attractive because:

  • While revocable living trusts are flexible, the formal probate process can be lengthy, as it is under the protection of 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 the 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.

3. Taxes

By moving assets from your ownership to your revocable living trust, those assets are effectively removed from your estate. In addition to avoiding probate, 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. Reducing your taxable estate is prudent and sensible.

Now What?

A revocable living trust is one of the most effective estate management tools.

An experienced Trust professional can help you identify and determine how 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.

Do you have more questions about setting up a revocable living trust?

Contact an experienced professional with Bank Midwest Trust Services team.

 

Post updated. Originally published May 2017.

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