A trust is an entity that legally transfers property and possessions to others after you pass away. Trusts are created between the person who makes the trust (the grantor), those who manage the trust (trustees), and the people who receive the assets stated in the trust (beneficiaries). There are several benefits to creating a trust as a part of the estate planning process, including automatic property transfer upon death and control over assets while living. Below, we discuss the benefits and features of revocable living trusts, one of the most common trusts in estate planning.
What is a Revocable Living Trust?
A revocable living trust is created during the grantor’s life. Revocable trusts allow the grantor to maintain access and control over the assets within the trust during their lifetime. Once the grantor dies, the assets are immediately transferred to the named beneficiaries without going through probate court.
Benefits of a Revocable Trust
Avoiding probate is one of the most significant benefits of creating a revocable trust. After the grantor passes away, the assets within the trust are transferred automatically to the named beneficiaries. If all estate assets are accounted for in the trust, there is no reason to go to probate court (as all the assets already have beneficiaries named). Avoiding probate allows your assets to be distributed to your beneficiaries more quickly and efficiently than going through the lengthy probate court process.
If you are unable to handle your affairs, a revocable trust could be used to allow a trustee to manage the trust for you without having to go through the process of naming a legal guardian. Revocable trusts may also be less complicated than a Power of Attorney.
Another significant benefit to a revocable trust is that you can change the trust throughout your lifetime. You can remove or add assets, amend the trust, or change beneficiaries as desired. This flexibility is unlike an irrevocable trust, which cannot be altered after it is created.
How to Create a Revocable Trust
Creating and maintaining a trust is complicated, so it is best to contact an estate planning attorney to ensure your trust is legally binding. When drafting the document, you will want to name the grantor, the trustee(s), and the beneficiaries. A trust must be signed by the grantor and two witnesses or a notary. Neither witness can be a named trustee.
After drafting and creating a trust, the next (and sometimes overlooked) step is to fund the trust. Funding the trust transfers ownership of bank accounts and assets you wish to include in the trust from your name into the trust’s name. If the asset is not owned by the trust or listed as a “payable upon death” or “transfer on death” beneficiary, they are not part of the trust. Payable upon death beneficiaries are often stated in retirement accounts and life insurance policies. You may also need to transfer ownership of bank accounts and any real estate property titles to the trust.
Once the trust is funded, it will remain intact until your passing. If you would like to alter or amend the trust, you can add a formal amendment to the trust declaration. To do this:
- Create a separate document with the word “amendment” at the top.
- Specify the changes you would like to make.
- Give your estate planning attorney the updated document with the original trust information.
Brian W Hurd: Trust and Estate Planning for Brevard County
There are many benefits to creating a revocable living trust, but making one may be complicated. An estate planning attorney like Brian W. Hurd will help you develop a comprehensive estate plan ensuring your family is taken care of after you pass away. Call us today at 321-453-5007 to schedule a consultation.