It’s become popular to use Revocable Trusts to avoid probate at your death and other estate planning reasons. In your particular situation, consider whether you can benefit from integrating a Revocable Trust with your Will.
If you have prepared a formal estate plan, a Will serves as the centerpiece of your plan. Sadly, many people still die intestate (meaning without a Will). If you die without a Will, the laws of your state determine how your assets are distributed − typically among certain family members − following your death.
Having a Will allows you to:
Probate is simply the court-supervised process of accounting for your individually owned assets following your death, settling your debts and expenses, and making final distribution of your remaining assets to the ultimate beneficiaries of your estate. During probate, the court looks to your Will for direction on how to distribute your assets.
But keep in mind your Will and the probate process only affect the distribution of your individually owned assets – those assets subject to probate. Assets you own with someone else as joint tenants with right of survivorship will automatically become the property of your surviving joint owner by operation of state law after your death.
Historically, critics of the probate process point to time delays, costs and unwanted publicity. We’ve all heard stories about how long the courts can tie up an estate in probate or the potential for high costs and professional fees. The tool often used to avoid probate is the Revocable Trust.
Revocable Trusts have become a primary estate planning tool for larger estates, particularly because the assets in the trust avoid probate following your death. A Revocable Trust is simply a trust where you’ve retained the right at any time to change the terms of the trust or to revoke the trust entirely.
Your ability to control the use of the trust assets or change the trust terms differentiates a Revocable Trust from an Irrevocable Trust. Typically, a Revocable Trust will provide that during your lifetime, you receive all of the benefits of the trust assets as you choose. Following your death, the trust assets are distributed in the manner you’ve directed through the trust terms.
When a Revocable Trust replaces your Will as the centerpiece of your estate plan, the trust is still not a complete substitute for your Will. Even with a Revocable Trust, it is critical that you still have a Will for the disposition of any assets you did not transfer to the trust during your lifetime, as well as for designating an executor (or personal representative) and a guardian for any minor children.
While a Revocable Trust may not be desired for all of your assets, it may still make sense under the following considerations:
As with any estate planning tool, you need to determine if trust planning will help address your individual situation. Factors to consider include:
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