The Various Benefits of Arranging a Revocable Trust
A will is a way to ensure that your loved ones receive a portion of your assets when you die or become unable to manage your assets. While this is the common option, you can also go for a revocable trust.
The option you choose will depend on your particular circumstances and needs. A will and trust attorney can help you decide which works best for you. This article will run you through everything you need to know about revocable trusts.
How Does It Work?
When an individual (the grantor) signs a trust agreement appointing a person(s), a corporation (trust company or bank), or both as trustees to manage the trust, the trust becomes revocable.
In most revocable trusts, the grantor’s property is managed for their benefit. The grantor often retains some control over the trust during the grantor’s lifetime. These rights often include the ability to direct the trustee to transfer all or part of the trust property as the grantor wishes, and the ability to amend or cancel the trust at any time.
When a grantor dies, the trust operates like a will, and the trust agreement directs the distribution of the property to the beneficiaries.
What Are Its Advantages?
There are several reasons why people choose revocable trusts, such as:
- Ensured despite Disability: If you become physically or mentally incapable of managing your own affairs, establishing a revocable trust is generally the best approach to ensure that your property remains accessible for your benefit. If you become disabled and don’t have a revocable trust or a power of attorney, you’ll need to go through a costly, time-consuming, and perhaps unpleasant court process. This is necessary as you appoint a conservator or guardian before your property can be used to benefit you or your family.
- Easy to Amend with Fewer Limits: Using a funded revocable trust, you may be able to appoint unrelated, out-of-state persons and out-of-state trust businesses to function as principal administrators of your estate after your death. Many governments limit your options in this area if you don’t have a trust. Also, amending a revocable trust is frequently easier than amending a will.
- Avoiding Probate Proceedings: Probate is the legal procedure for determining whether or not a will is legitimate. Probate avoidance is frequently highlighted as one of the critical benefits of a revocable trust since it may be costly and time-consuming.
- Immediate Access after the Death: At the grantor’s death, assets under a revocable trust can be used to obtain funds to pay estate taxes, administration costs, and obligations right away, without having to wait for a probate decree or preliminary letters.
- Simple Transfer Even without the Originals: To avoid a presumption that the will was revoked, all original wills must be supplied when submitting a will for probate. At the time of death, only one original is usually required. Multiple originals may be signed, and one original may legitimize transferred property kept in the trust at death because revocable trusts are not probated.
- Uninterrupted Investments: One of the essential advantages of establishing a revocable trust is providing continuous financial management if the grantor becomes incapacitated or dies. There is no need to reregister securities after death if the assets were already transferred into the trust’s name.
While you can use your will to protect your assets, a revocable trust is another viable option to consider. If you’re thinking of creating one, make sure you weigh the additional costs against the amount of estate tax savings or probate avoidance.
It is best to consult with a trust attorney to determine whether a revocable trust will work for you.
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