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Using Revocable Living Trusts as Part of Your Estate Plan

A revocable or "living" trust (“RLT”) is a legal document that can be used to dispose of your property at your death.  The RLT can provide for outrights gifts to beneficiaries or can create “sub-trusts” which will hold your assets in trust for your beneficiaries.  If properly structured, an RLT can also be used to promote tax savings and assets protection.

The RLT is created by signing a trust agreement which, among other things, will designate your beneficiaries and trustees.  The “trustee” is the person or entity that will manage the assets of the trust, the “beneficiary” is the person for whom the assets are held and the “grantor” is the person who creates the trust.

Typically, as the person creating the trust, you will serve as the initial trustee during your lifetime followed by a series of successor trustees that will act upon your incapacity or death.  At your death, the successor trustee will distribute or hold the assets of the trust in accordance with the trust directions.  During your lifetime, you can amend or terminate the trust at any time.  Although your assets will be held and titled in the name of the trust, you will have the right to assert complete control of the assets and the terms of the trust whenever you like, as long as you have the capacity to do so.

Unlike a will, assets held in trust do not have to go through probate.  These properly funded assets do not have to go through the probate process because after your death the trust, as the owner of the assets, remains.  If your assets are not properly funded into the trust, then they could still be subject to the probate process.

Some advantages of using a revocable living trust-based estate plan can include the following:

• RLTs can utilize special needs planning to protect a dependent's needs based government assistance, such as SSI benefits. An inheritance given outright (not in trust) to such an individual could be more harmful than helpful as it could disqualify them from receiving their benefits for the statutory penalty period.
• RLTs are private and confidential and usually there is no requirement to file the trust with the probate.
• Titling your local and out-of-state real property into the name of your trust avoids probate proceedings.
• RLTs provide for your incapacity/disability without Court action or intervention in the event you become mentally or physically incapacitated.
• RLTs typically reduce the time required to settle the estate affairs because there are no set administration time periods that tie up assets.
• RLTs avoid court intervention. Your estate is handled by the trustee you name in your trust, in accordance with your instructions.

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