Wills and trusts are useful legal instruments that allow you to appoint successors that will inherit your properties once you are incapacitated or passed away. Setting up an estate plan is important so that you know your assets will be used the way you deem fit even after death or incapacity.
However, in some cases, these trusts must be revoked, whether it is to make minor changes to the terms that have been written or to create a new trust entirely.
Estate planning, wills, and trusts are very complicated areas of law. Don’t be afraid to contact us at Jones Legacy Law if you need an Estate Planning Attorney in Tacoma, Washington. Talk to us through our page today.
Trusts and Revocable Trusts
A trust is a fiduciary relationship in which a trustor, also known as a grantor, gives a successor trustee the right to be the executor that will manage his assets for the benefit of a third party known as the beneficiary.
It is an estate planning tool that is made so that the trustor can dictate how he wants his assets to be distributed. In doing so, he is also able to reduce paperwork, save time, and even avoid probate and some taxes like estate tax.
There are many different types of trusts, but they can be grouped into two main types: revocable and irrevocable trust. An irrevocable living trust cannot be modified, amended, or terminated without the beneficiary’s consent.
On the other hand, a revocable trust, or inter-vivos trust, can be altered by the owner so long as he is alive. Once the trustor is deceased, it is at that time when the trustee will distribute the trust property to the appointed surviving heirs. It is also for this reason that a revocable trust is also known simply as a living trust.
At this point, it might seem that revocable living trusts are better than irrevocable trusts because they offer flexibility, but it is this flexibility that gives revocable trusts a few disadvantages.
First, the assets placed into revocable trusts do not offer the same level of asset protection in that they are not protected from creditors. Since these trust assets are more liquid, they can be ordered liquidated if deemed necessary by the court to pay dues to a certain creditor.
Secondly, assets in revocable trusts are still subject to state and federal estate taxes. Irrevocable trusts can avoid these taxes because it removes the assets from the trustor’s taxable estate; it also exempts the properties from income tax for the income that it generates.
Don’t hesitate to contact us if you need help with anything related to trusts, be it for setting up a trust, avoiding probate, or creating a trust fund. We at Jones Legacy Law are experts of trust law and the state law that relates to estate planning. We can help you make sure that the inheritance you pass on will be put to good use so that your children and even grandchildren are well taken care of even when you die.
Why would a trust be revoked?
A trust may be revoked if the trustor wants to make changes to the trust agreement such as appointing a new trustee, changing the beneficiaries of the trust, or changing the provisions. One of the most common reasons for revoking a trust happens during cases of divorce where the trustee writes off his ex-partner.
Of course, it is possible to make minor changes to the trust without revoking it together, but in some cases, it might be easier to just create a new trust. This is especially the case if you think you want to change your type of trust to make it more suitable for your situation.
If you need help exploring the different types of trusts like testamentary trust, charitable trust, spendthrift trust, special needs trust, discretionary trust, family trust, asset protection trust, among many others, we are here to help you know what type of trust you need. We understand that all the information coupled with legal jargon can get confusing. That is why we are here to help you. Contact us today.
How is a trust revoked?
To revoke a revocable living trust, first, you must transfer all of the estates that you have held in trust back to you. Ownership must be transferred back to you by changing the title deed of a property as well as other legal documents. This is essentially the inverse of what you did when you formed the revocable living trust.
Second, you must create a legal document called the revocation of living trust that states your right to revoke the trust and that you are thereby revoking all the terms and conditions in the trust so that it is fully dissolved.
This document may be acquired from a legal website or local probate court. The revocation of trust must be dated and signed in front of a notary.
Finally, you inform the court that your trust has been terminated and revoked.
The laws surrounding wills and trust can get especially tricky since the wording has to be precise on top of having to know the policies behind trusts.
We at Jones Legacy Law are a Tacoma, Washington-based estate planning law firm and we are ready to help you in trust administration. We can offer our services to amend trusts including adding or removing a successor, transferring assets, and many more. We can also give aid if you need to scrap your drafted trust altogether.
We understand that as a settlor, what happens to your property is of the utmost importance to you, and so it is also important to us. Don’t hesitate to contact us today.