A revocable living trust may be used as a substitute for a Last Will and Testament. The revocable living trust can provide for the management of the assets of an individual (called the “grantor”) both during his or her lifetime and after death. Like a Will, a revocable living trust dictates the distribution of the grantor’s assets to his or her beneficiaries upon the grantor’s death.
The terms of this type of trust may be changed or revoked by the grantor at any time, and allows for the designation of any individual(s) or corporation(s) as trustee, including the grantor, his or her spouse, an adult child, a close friend, an attorney, a trusted advisor or a corporate trustee. A revocable living trust is beneficial in the event the grantor becomes incapacitated or incompetent, as the trustee (or successor trustee) is able to manage the grantor’s assets and provide for his or her needs without interruption or court intervention.
A revocable living trust can offer the following advantages over a Will:
manage and protect assets during the grantor’s lifetime, including in the event of incapacity or incompetence;
provide continuity in the management of the grantor’s financial affairs following his or her death;
control how, when and to whom assets are to be distributed;
avoid the costs and delays of probate;
provide added protection from court challenges (such as Will contests); and
ensure privacy in the handling of the grantor’s financial affairs and estate.
Revocable living trusts should be prepared in conjunction with a pour-over Will in order to ensure that, upon the grantor’s death, any assets that remain in his or her name or were inadvertently left outside the trust, will be transferred to the trust for distribution in accordance with the terms thereof. In addition, the pour-over Will is used to name the grantor’s executor and the guardian(s) for any minor children of the grantor.
Every adult needs a Will, but a revocable living trust is not recommended for everyone, despite its significant advantages. Whether or not an individual needs a revocable living trust depends on the individual’s age and health, the level of his or her wealth, the types of assets the grantor owns, the level of privacy desired, the risk of a possible Will contest, and whether the individual is married. As compared to a Will, a revocable living trust is typically more costly to establish and may involve more ongoing maintenance. Such trusts are also typically more complicated to implement, as opposed to Wills, because they require that the grantor transfer his or her property into the trust. For many assets, this can be a relatively simple, yet somewhat burdensome task. Items with title documents, such as real estate, must be retitled so that the owner of the property is the trust.
To decide whether a revocable living trust or a Will is more appropriate for you, contact Lara M, Sass, PLLC.