Why A Lot of People Decide to Set Up a Revocable Living Trust
With so many estate planning documents to choose from, it is often confusing which ones will work best for the estate plan you are drafting. What this article will focus on is setting up a revocable trust (which is the opposite of an irrevocable trust).
– Establishing a trust
When you create a trust, any bank account, investment, real property, or other estate assets and property in the trust are no longer ‘yours’. Following relevant state law, they are in the trust account that ‘owns’ it, both while you are still living and when you die. In several ways, you and your trust beneficiaries will benefit from this during your lifetime and (especially) after death. Since the assets of the deceased person are owned by the trust and not by the decedent, they need not be brought to court and probated.
The first thing to be done to set up a trust is appointing a trustee, who will be managing and administering the personal property and estate of the grantor. A loved one, a trust company, or even grantors themselves can be appointed as trustees. Instructions in a living trust will determine all these.
– The revocable nature of this legal document
Most people set up a trust because they want their estate to continuously grow for several generations. A professional trustee who will carry out the instructions and manage your trust estate can limit withdrawals to only income and certain emergency cases.
Aside from the fact that income from trust assets, though taxable, is yours throughout the remainder of your life, you also keep a certain level of control over trust property. Under relevant trust law, a living trust you create may be revoked or amended during your lifetime, if necessary. Our hands-on Tacoma estate planning attorneys can explain how you can benefit from this flexibility and revocability of trust documents.
– When a revocable trust can be useful
An individual who creates a trust could decide on guardianship while he or she is still alive. This can include naming guardians for minor children and controlling their spending habits. Depending on the circumstance, the trustee you appointed could manage financial affairs without the need for a durable power of attorney and could make decisions for you if you become disabled or incapacitated.
Such is also useful for a beneficiary of a trust who wants to maintain his or her privacy and keep private records and information on possible probate estate. Keep in mind that when wills are subject to the probate code, the legal document involved becomes part of public records, and privacy is often compromised.
– In contrast to a last will and testament
Last wills and testaments could lead to disputes between heirs you decided to appoint. It is not uncommon for a family member to try to contest a will for questionable validity, alleged undue influence, or supposed lack of testamentary capacity. When you create trust, you can specifically disinherit any individual posing a challenge to death wishes.
Another issue that may arise from this estate planning document is the messy probate process. You can generally avoid probate if you established a trust instead. Transferring property through the probate court can be quite complicated, and revocable living trusts enable you to minimize probate costs and related proceedings. Get guidance from our competent Tacoma estate planning attorneys.
– Maximizing this estate planning tool
Proceeding with your plan to you establish a trust can give you several benefits. Remember that estate taxes are often high. Provisions in the trust can allow for a transfer of wealth through a credit shelter trust, which shall be established when you pass away. Under trusts law, for estates that go beyond estate tax exclusions, this can reduce what is taxed.
Setting up a trust is not only helpful in avoiding probate and the related legal process. In terms of estate administration, creating a trust can also be beneficial in many ways for your surviving spouse, children, grandchildren, or any other trust beneficiary.