Estate planning can involve many stages, details and parties. On top of that, there are several different options to choose from when deciding what works best for you and your family. One such option is a revocable living trust.
What is a revocable living trust?
A trust is a document that outlines how your estate gets distributed. A trust can be used to manage your estate while you are living as well as after you pass.
When a trust is revocable, it means the contents of the trust are flexible. You can add or remove beneficiaries and modify plans for your assets at any time. When deciding whether to use a revocable living trust, consider these pros and cons.
Pro: Avoids probate court
When you create a revocable living trust, your assets will go straight to your heirs when you’re gone. This means your beneficiaries won’t have to endure stressful, time-consuming and often expensive probate court proceedings. Instead, your designated trustee handles your assets without a court overseeing the process.
Con: Does not protect your assets
Creditors can have access to your assets in a revocable living trust. Should you run into any problems, creditors can liquidate your trust assets to satisfy any money you may owe. If you are worried about losing your assets, consider placing valuable ones in an irrevocable trust instead.
Pro: Lets you plan for incapacitation
Life can be unexpected. In the event that you are unable to manage your estate on your own, a revocable living trust allows you to plan for incapacitation. Your trustee will take over and handle your affairs for you. Whoever you choose, they have a legal responsibility to carry out your instructions and plans.
Con: Offers no tax benefits
A revocable living trust will not help you save on income or estate taxes. You will still need to include tax-saving strategies in your trust. If you are looking to save on taxes, a revocable living trust might not be the best option for you.
It’s important to find the right plan for you so that your estate is in good hands. An attorney can answer your questions and help you draw up an estate plan that will benefit you and your family.