Revocable living trusts are a popular estate planning tool that can help you protect your assets and ensure that they are distributed according to your wishes after you pass away. But what exactly is a revocable living trust, and how does it work?
What is a Revocable Living Trust?
A revocable living trust, sometimes called a living trust, is a legal document that allows you to transfer ownership of your assets into a trust, while still retaining control over them during your lifetime. Essentially, you create a separate legal entity to hold your assets, with yourself as the trustee in charge of managing them.
The “revocable” part of the name means that you can change or revoke the trust at any time during your lifetime, for any reason. This flexibility is one of the main advantages of a revocable living trust.
Why Use a Revocable Living Trust?
There are several reasons why you might want to use a revocable living trust as part of your estate planning. Here are some of the most common:
Avoiding Probate: Probate is the legal process by which a court determines how to distribute your assets after you die. It can be time-consuming, expensive, and public, which is why many people prefer to avoid it if possible. By placing your assets in a revocable living trust, you can bypass the probate process and ensure that your assets are distributed according to your wishes without court intervention.
Protecting Your Privacy: Unlike a will, which becomes a public record when it is filed with the court, a revocable living trust is a private document. This means that your personal and financial information will be kept confidential.
Managing Your Assets: If you become incapacitated or otherwise unable to manage your assets, your trustee can step in and manage them on your behalf. This can provide peace of mind and ensure that your assets are protected.
How to Create a Revocable Living Trust
Creating one is a relatively straightforward process. Here are the basic steps:
- Decide what assets you want to place in the trust.
- Choose a trustee to manage the trust. This can be yourself, a family member, a friend, or a professional trustee.
- Draft a trust document. This is a legal document that outlines the terms of the trust, including how assets are to be managed and distributed.
- Fund the trust. This involves transferring ownership of your assets into the trust, which can be done through a simple process of changing the title or beneficiary designation of each asset.
- Maintain the trust. This involves managing the assets in the trust and updating the trust document as necessary.
A revocable living trust can be a useful tool for managing your assets and ensuring that they are distributed according to your wishes. I especially recommend them as part of an estate plan for married couples and those with children. It makes the handling of your assets much easier upon your death.
If you want more information about estate plans, what documents are included, and things you need to think about to prepare them, then I recommend that you download my free book, A Guide to Creating Your Estate Plan. It will get you a long way towards achieving that goal.
But if you live in Burlington, Camden, Gloucester, Salem, or Cumberland counties, have decided that you need to put together an estate plan, and are ready to move forward to create one, then just click here to schedule a free, no obligation phone call to get things started.
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