Revocable Living Trusts: What are They and Do I Need One?
While wills are by far the most popular estate planning tool out there, there are other estate planning options to consider as well. Revocable living trusts are one such option. A revocable living trust is a written agreement wherein you arrange for someone to manage whatever assets you decide to place into the trust. It is effective as soon as it is written, and, since it is revocable, you can change, or revoke, it at any time, as long as you are still competent to do so.
You may have heard of revocable living trusts in the context of avoiding probate. While they do accomplish that goal by allowing the assets in them to pass to beneficiaries outside of probate, there are other, perhaps even more important, purposes that they serve. Specifically, a revocable living trust can ensure that your assets are managed properly for the benefit of your beneficiaries. Whether you have minor children or other beneficiaries who may not be able to manage a large sum of money, a revocable living trust can provide for the management of the assets that you wish them to have until they reach an age that you have designated, or, indefinitely, if you think that they would never be capable of managing the assets responsibly on their own. Some situations where this type of management can be very useful include providing for a disabled relative and protecting a beneficiary’s share of the assets from bankruptcy. If there are assets that you wish to pass to certain beneficiaries immediately upon the event of your death, you can include instructions for those transfers in the trust, too.
If you would like a trusted relative or friend to be able to manage your financial affairs for you in the event that you become incapacitated, a revocable living trust can do that, too. You can serve as the trustee of the trust until you are ready to hand the reins over to the successor trustee that you have designated. The successor trustee would also take over managing the trust in the event that you become incapacitated before you resign from the role of trustee.
Revocable living trusts can also help to avoid will contests. While people do sometimes try to contest living trusts, they are often unsuccessful. This is because these individuals have to prove that the settlor was incapacitated or under some form of undue influence when they created the trust, and at every time that they transferred assets into or out of the trust or made an investment decision regarding the assets therein.
No discussion of revocable living trusts would be complete without discussing the benefits that come with avoiding probate. Since the assets in the trust pass outside of probate, your beneficiaries will have access to those assets much more quickly than they would if they had to wait for them to go through probate. This can make things easier for your family as they deal with their loss. Also, if you own property in more than one state, allowing that property to pass outside of probate means that your beneficiaries won’t have to deal with probate proceedings in those other states.
A revocable living trust can be an excellent estate planning tool. To learn more about whether a revocable living trust is right for you, contact the law office of J. Joseph Weber, P.A. online, or call us for an initial consultation. Our office in Wichita is open Monday through Friday, from 8 a.m. to 5 p.m., and we offer weekend and evening hours by appointment.