One of the most important goals of estate planning is ensuring that your loved ones are cared for after you’re gone. One tool that can help streamline this process is a revocable trust. In many cases, people aren’t aware of the benefits that a revocable trust offers. In fact, Beck, Lenox & Stolzer Estate Planning and Elder Law, LLC, find that too many think having a Will is sufficient! It rarely is. However, if you use trusts correctly, they offer one of the best ways to avoid lengthy, expensive probate processes. Here’s information on how to avoid probate with a Revocable Trust.
What Is a Revocable Trust?
A revocable trust is a legal arrangement where a person, known as the grantor, places their assets into a trust managed by a trustee. The unique feature of a revocable trust is that it can be changed or terminated at any time during the grantor’s lifetime. This flexibility allows the grantor to control the assets and make necessary changes.
The trustee, often the grantor at first, manages the assets within the trust. However, if the grantor becomes incapacitated or dies, a successor trustee will manage or distribute the assets. By setting the terms of your trust, you can outline how to manage the trust and select a successor trustee you can count on.
How Does a Revocable Trust Help Avoid Probate?
According to The American College of Trust and Estate Counsel, one of the primary benefits of a revocable trust is its ability to avoid probate. Probate is a legal process after someone passes away, during which their will is validated, and their estate is distributed. This process can be lengthy, expensive and public, which many people wish to avoid.
By placing assets in a revocable trust, they are no longer considered part of the grantor’s estate upon death. The trustee or successor trustee instead directly manages and distributes the assets according to the trust’s terms. This bypasses the probate process entirely, saving time, reducing costs and maintaining privacy for the grantor’s beneficiaries.
Are Assets in a Revocable Trust Protected from Creditors?
A common misconception is that assets in a revocable trust are protected from creditors. However, this is not the case. Assets in a revocable trust are still owned by the grantor during their lifetime, meaning they are not shielded from creditors. If the grantor owes debts, creditors may still have access to the assets in the trust, just as they would if the assets were held in the grantor’s name.
What Steps Should You Take to Set Up a Revocable Trust?
Setting up a revocable trust involves a few key steps:
- Drafting the Trust Document: This legal document outlines the terms of the trust, including who will manage the trust (the trustee) and who will inherit the assets (the beneficiaries).
- Funding the Trust: This step involves transferring ownership of your assets into the trust. For instance, you might retitle your home or bank accounts in the trust’s name. This step is crucial for ensuring that the trust covers the assets and avoids probate.
- Choosing a Successor Trustee: Designate someone you trust to manage the trust if you become incapacitated or after you pass away. This person should be someone responsible and capable of managing financial matters.
- Regularly Review and Update the Trust: Life circumstances change, and so should your trust. Reviewing and updating your trust periodically is important to ensure that it reflects your current wishes and situation.
Avoid Probate and Secure Your Family’s Future
If you want to learn more about how a revocable trust can benefit you and your family, consider scheduling a consultation with our law firm. Our experienced estate planning attorneys can help you understand your options and create a plan tailored to your unique needs. Don’t leave your family’s future to chance—reach out today!
Key Takeaways:
- Avoids Probate: Assets in a revocable trust bypass the lengthy and costly probate process, saving time and money.
- Maintains Privacy: Unlike a will, a revocable trust is a private document that keeps your estate details confidential.
- Provides Flexibility: You can modify or revoke the trust anytime during your lifetime, offering control and adaptability.
- Prepares for Incapacity: Designates a successor trustee to manage your assets if you become incapacitated, avoiding court-appointed guardianship.
- Simplifies Asset Management: Streamlines managing and distributing your assets according to your wishes.
Reference: The American College of Trust and Estate Counsel (ACTEC) (Apr 11, 2019) “How Does a Revocable Trust Avoid Probate?
