One of the most important goals of estate planning is ensuring that your loved ones are cared for after you're gone. One tool that can help streamline this process is a revocable trust. In many cases, people aren't aware of the benefits that a revocable trust offers. However, if you use these trusts correctly, they offer one of the best ways to avoid lengthy, expensive probate processes.
A revocable trust is a legal arrangement where a person, known as the grantor, places their assets into a trust managed by a trustee. The unique feature of a revocable trust is that it can be changed or terminated at any time during the grantor's lifetime. This flexibility allows the grantor to control the assets and make necessary changes.
The trustee, often the grantor at first, manages the assets within the trust. However, if the grantor becomes incapacitated or dies, a successor trustee will manage or distribute the assets. By setting the terms of your trust, you can outline how to manage the trust and select a successor trustee you can count on.
According to The American College of Trust and Estate Counsel, one of the primary benefits of a revocable trust is its ability to avoid probate. Probate is a legal process after someone passes away, during which their will is validated, and their estate is distributed. This process can be lengthy, expensive and public, which many people wish to avoid.
By placing assets in a revocable trust, they are no longer considered part of the grantor's estate upon death. The trustee or successor trustee instead directly manages and distributes the assets according to the trust's terms. This bypasses the probate process entirely, saving time, reducing costs and maintaining privacy for the grantor's beneficiaries.
A common misconception is that assets in a revocable trust are protected from creditors. However, this is not the case. Assets in a revocable trust are still owned by the grantor during their lifetime, meaning they are not shielded from creditors. If the grantor owes debts, creditors may still have access to the assets in the trust, just as they would if the assets were held in the grantor's name.
Setting up a revocable trust involves a few key steps:
If you want to learn more about how a revocable trust can benefit you and your family, consider scheduling a consultation with our law firm. Our experienced estate planning attorneys can help you understand your options and create a plan tailored to your unique needs. Don't leave your family's future to chance—reach out today!
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Reference: The American College of Trust and Estate Counsel (ACTEC) (Apr 11, 2019) “How Does a Revocable Trust Avoid Probate?
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