A revocable living trust is often created alongside a will. This opportunity allows you to name a trustee and transfer ownership of your assets to beneficiaries while you are living. This means that your trustee has ownership of the asset, but you can still make decisions about the trust’s operations until you pass away.
In effect, by creating this estate planning resource, you’ll retain control over the assets in the trust during your lifetime. This arrangement can potentially provide certain protections in the event of incapacity or disability, better ensures privacy and allow for flexibility in managing your assets.
The advantages of a revocable living trust
Revocable living trusts feature advantages and disadvantages. Some of the advantages are as follows:
- The biggest benefit to having a revocable living trust is that the assets included in it won’t need to go through probate after you pass away. Because you have already named a trustee, the trust will still be operational.
- Your privacy will be protected by appointing a trustee instead of going through probate, which is a public process.
- If you become incapacitated at any point in your life, your appointed trustee can take over and ensure that your affairs continue to run smoothly. This means that your spouse and/or children won’t have to go to court to appoint an emergency trustee at a time that will already be stressful for them.
There are also some disadvantages to consider when creating a revocable living trust. These include:
- You’ll need a pour-over will, which is a legal document that transfers any unfunded assets to your revocable living trust upon your death.
- Setting up a living trust can be both relatively costly and time-consuming. Trustees need to be given the titles for vehicles, boats and other properties. Deeds must be reissued in the trustee’s name, including investments, stocks and bank accounts.
Choosing to set up a revocable living trust is a consequential decision. It is, therefore, ultimately in your best interest to seek legal guidance as you consider your options.
