As you age, there are two main things you should think about. One is retirement. You can spend your golden years living the desired way if you have the required retirement resources and a sound financial strategy. Your estate is the second important consideration. Additionally, it will be easier for you and your loved ones to transition into old age if you have a plan for transferring your assets. A financial advisor can assist you in making sure your living trust and other estate planning matters are according to your overall financial plan.
What is a revocable living trust?
With a revocable living trust, also commonly referred to as a living or revocable trust, you choose a trustee to oversee specific assets for you and your beneficiaries while you are still alive. Unlike a Will, a trust can offer greater privacy and is changeable.
You can spare your estate and heirs the trouble and expense of probate by creating a living trust or revocable living trust. Because a trust cannot name guardianship for young children, living trusts and wills are frequently used as part of an estate plan.
How to create a revocable living trust
You must sign a written agreement to create a revocable living trust. As the trust needs to be administered by someone, you will designate a trustee. Since it’s easier to handle, most people choose themselves as the original trustee. However, you have to designate a successor trustee who will take over if you become incapacitated or die. The trust assets may be used, sold, or otherwise disposed of by the trustee, but only by the provisions of the Will you establish.
Reasons to have a revocable living trust
- To avoid probate
Probate is the legal procedure wherein a court confirms the validity of your Will and then grants your executor permission to allocate your assets to your beneficiaries by your instructions. The probate court may apply different state criteria to determine how and to whom to transfer your property if you pass away without a Will [intestate].
On the other hand, trusts usually help prevent the probate process. When you create a living trust and move assets into it, it’s unlikely that the probate courts will be involved in deciding how those assets are distributed after your death.
- For protection in case of incapacity
If the grantor becomes disabled, a living trust or revocable living trust enables seamless transition planning. It won’t be legally binding if the trust isn’t established when the sick person is considered mentally competent to sign it. The successor trustee takes over in the event of the person’s demise or incapacity to manage their financial affairs.
- For privacy
Probate processes are not only time-consuming and frequently costly but are also typically open to the public. On the other hand, assets held in revocable living trusts and living trusts often escape prying eyes since they are not subject to probate.