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Why You Might Want to Create a Revocable Trust

In terms of avoiding probate, it is true that there are other methods you might consider, such as assigning assets to designated beneficiaries, or a simply establishing joint ownership. 

However, the advantage of a revocable trust for probate avoidance is that, when it is established and properly funded, it ensures a consistent estate plan. 

Too often, when people rely on designated beneficiaries and joint ownership, the result is a plan that is skewed unintentionally toward one or another beneficiary. The reason for this is that if you have multiple beneficiary designations, and you change one but forgot to change the others, you may create a different distribution than the one you had in mind. By contrast, with a revocable trust, the change can be made once (by means of an amendment to the trust) and this will affect all assets.

Other reasons for creating a revocable trust include:

• Minimizing estate taxes
• Keeping assets available for children until they reach adulthood 

Guardianship & Management for Beneficiaries Under Age 18

Questions about guardianship and management for those under the age of eighteen are quite common.

While your beneficiaries are minors — that is, under age 18 — the trustee can manage and invest the trust funds, free of the oftentimes considerable costs and restrictions that arise when a Probate court must appoint and supervise a guardian of the property until the beneficiary reaches the age of majority.

Furthermore, a guardianship terminates upon the beneficiary reaching age 18.

Obviously, all children do not mature at the same rate, and it is thus not always a good idea to have a young adult gain control of significant assets at that age. 

With a revocable living trust, management of a beneficiary’s assets can continue beyond the age of 18, free of Probate court involvement, to whatever age you specify. For example, you can easily dictate that at age 18 the trust beneficiary be given 25% of the assets, another 25% at age 22 and the remaining 50% at age 25, if that is your wish.

Trust v. Will?

People often ask about the difference between a will and a trust. 

There are numerous benefits to executing a revocable living trust as opposed to a last will and testament, in particular the following three:

1. Probate: Once property is transferred into a revocable living trust, it does not go through Probate
   
2. Privacy: Unlike a last will and testament, a revocable living trust is a private document, and is thus not published
   
3. Control and Simplification: In addition to a revocable living trust not complicating the management of your assets during your lifetime, it also simplifies the transfer of your estate to your beneficiaries upon your death 

"Pour Over" Wills?

Are you familiar with "Pour Over" wills?

If so, then you know that a “pour over” will is used in conjunction with a revocable living trust. This document is designed to “pour” anything of yours that was not placed into your revocable living trust during your lifetime into it after your death. You might think of it as a “safety net.”

Chances are, you’ll never need a "pour over" will, but if an unexpected need arises, it’s good to have.

Elder Law Questions Part 2

In a previous post we shared some of the most common questions about Elder Law. 

Here are three more important things that clients consistently ask about and that you might want to ask yourself when evaluating your and your family's position:

• Have I communicated my wishes to my loved ones regarding end of life decisions?
• Will I be able to take care of my own needs without help from other family members or government programs? If not, do I expect family members to help me as I age? What supports are available to help me live independent from my family?
• Do I have knowledge about the resources that are available to me to assist with my planning?

Can Probate Be Avoided?

People often ask about if and how probate can be avoided, and there are a number of different ways of holding assets that will avoid probate. 

The simplest is probably just joint ownership, such as a piece of real estate held as joint tenants or a bank account held jointly. This type of assets will pass automatically to the other joint owner when the first owner dies – but keep in mind, there will still be a probate at the second death. 

Another way to avoid probate is by assets which have 'designated beneficiaries', such as an insurance policy or a retirement plan (such as an IRA). These assets will pass to those beneficiaries when the owner of the asset dies.

Still another way to avoid probate is to hold assets in a revocable trust.