Revocable living trusts can be an easy solution to numerous financial and estate planning objectives and are usually are endorsed by financial planners, trust officers and attorneys as the best possible solution to deal with estate planning problems. Though a revocable living trust can be an excellent tool for taking care of some sort of financial affairs, before concluding on it, make sure it is the best available tool for your particular condition.
A revocable trust is a legal arrangement through which legal title to property is shifted from personal ownership to legal ownership of the trust. What is unique about revocable trusts is that the clauses can be changed or terminated at anytime during the grantor or the trustor’s lifetime.
The person who creates the trust is known as the trustor, settler, or the grantor and it is the trustee who manages the assets in the trust according to the directions given in the trust document for beneficiaries identified in the trust agreement. Assets that are owned solely by one trustor can only be kept in a trust.
As the trustee, the grantor holds absolute control over the trust until he or she dies, becomes incompetent or resigns, and a successor trustee takes over his/her responsibilities. The successor trustee is legally responsible for administering the entire trust cautiously and keeping the beneficiaries informed about any significant events and changes.
Beneficiaries of a trust are named by the grantor and can be anybody - the person, who formed the trust, family members, friends, and charities like religious organizations, educational or medical institutions. To know if a living trust would be a fit for your financial planning goals; check the advantages and disadvantages of a living trust.
A living trust is a valuable legal weapon to maintain your financial affairs in case you become inept. You can even act as the trustee of your trust and appoint a successor for performing your financial affairs. However, you must know here that a successor trustee is only authorized to look after financial affairs of the trust and not the trustor’s health care decisions.
Another advantage of having a living trust is that it avoids probate. The trustee of a trust holds the legal title to the trust assets and can transfer the title to the beneficiaries named in the trust and that is without any probate procedure. This, in a way, helps an individual to avoid the time and expense of complicated probate proceedings. Moreover, a living trust maintains the privacy of your financial affairs even after your death.
It is the cost and the greater time frame that typically make people hesitant to consider a living trust. This is the reason most people lean towards wills and not trusts. Even if you choose to be the trustee of your own trust, you have to pay the required fees to the trustee.
Moreover, there is no such tax advantage that you might get by enforcing a living trust.
If after going through the advantages and disadvantages you feel that a living trust is the best possible option for your particular condition, you should make no delay in preparing the trust agreement. The trust agreement is a significant document that requires you brood cautiously as how you want to handle your finances, how you want to divide your property and who is going to inherit your property after your death.
Whenever you prepare a living trust, your assets are shifted to the trust. In the state of Florida, you will find both advantages and disadvantages of moving your homestead to your living trust. It’s only a probate attorney who could tell you about the ins and outs of transferring your assets to a trust.
Prepare a pour-over will, as even if you have a revocable trust, you still need a will. If you prepare a pour-over will, the assets you own will pass to the trust upon your death. A pour-over will takes care of any asset that has not made its way to the trust yet.