A revocable living trust is a document created by you to manage assets during your lifetime and distribute the remaining ones after your death. This type of trust is a three-party agreement between the trust maker (settlor), the manager of the trust (trustee), and the trust beneficiaries. Your estate planning attorney may recommend this option as part of a larger financial strategy.
How a Revocable Living Trust Protects Your Family and Assets
A revocable living trust allows you to bring all of your assets together under one plan. It’s also a flexible directive that can be modified as needed while you’re alive. This means if circumstances change, such as the birth of a child or the acquisition of new assets, the estate plan can be updated to reflect these changes. This flexibility allows individuals to have greater control over their assets and ensures their wishes are carried out in the most effective and efficient way possible.
Additionally, estate planning documents can include provisions for unexpected events, such as a settlor’s incapacity or disability, and are structured to provide for the needs of beneficiaries in the event of unforeseen circumstances.
The trustee, appointed by the settlor, manages the trust assets according to the trust's terms.
Other Benefits of a Revocable Living Trust
One common advantage of a revocable living trust is that it generally avoids probate. Probate is the legal process of distributing a deceased person's assets according to their will or state law. It can be a lengthy and expensive process, and the proceedings are public record.
If you have any titled assets and want your loved ones to avoid court interference, public knowledge, and conflict after your death or incapacity, a revocable living trust can be one the most effective vehicles to give your family privacy and peace of mind. Additionally, a trust provides asset protection from creditors and other legal claims.
By using tools such as trusts or joint ownership, individuals can transfer their assets outside of probate, thus avoiding the associated costs and delays. But you need guidance from an estate planning attorney as to how the trust should be funded during your lifetime and whether you need a pour-over will to probate any assets to the trust after death. Not all assets can be transferred outside of probate, and the rules and regulations surrounding probate vary by state.