For many people, the thought of engaging in any serious estate planning just seems like an expensive hassle. Many Americans would rather choose a simple Last Will and Testament to handle their estate settlement issues – though fewer than half of all adults even take that simple step. All too often, families are surprised when a loved one’s estate ends up enduring the costly and time-consuming probate process. Many are even more surprised when they discover just how much that process ultimately costs, and how it impacts their inheritance. If you’re thinking about estate planning and considering nothing more than a will to execute your last wishes, maybe it’s time you also considered the many advantages revocable trusts can provide.
Escaping Probate is Just the Start
The most obvious advantage offered by revocable trusts has to do with probate: these living trusts can be an effective way to ensure that your assets can avoid probate altogether. To understand how this happens, you only need to understand why certain assets are subject to probate while others are not. You see, probate is designed to provide an efficient and secure way to settle estates. To do that, the process validates the decedent’s last wishes as expressed in his valid will, and then uses a court-approved personal representative to gather assets, identify creditors, pay legitimate debts and taxes, and the distribute the remainder of the estate to the deceased’s heirs.
Probate is thus unnecessary if the estate has another mechanism by which it can be settled. If, for example, those assets have a way of being transferred to the heirs without court intervention, then there is no need for a probate process to distribute them. Trusts can serve as that mechanism, since they involve a legal agreement between the grantor who transfers ownership of his property to the trust, the trustee who oversees those assets, and the beneficiary who will ultimately receive them. When the grantor dies, the trustee simply follows the terms of the trust as he or she distributes the trust’s assets – without probate ever coming into play.
What About Other Benefits?
Of course, avoiding probate is nice, but there are other advantages you can enjoy with revocable trusts too. And some of these can be even more beneficial than just escaping the bonds of the probate process. For example:
- With a revocable trust, the grantor can maintain control over assets while he is alive – while still enjoying many other advantages from having assets held in trust. To do that, the person making the trust simply names himself as the trustee. He then names a successor trustee to take charge of the trust in the event of incapacitation or death. With a true living trust, that grantor can name himself as the primary beneficiary as well, with secondary beneficiaries receiving the assets after the grantor’s death.
- Trusts can provide protection against court challenges. Look, there is no denying that will contests are a rare phenomenon. But it would also be foolish to pretend that they don’t ever happen. To protect your estate against a possible challenge of the type that might occur with a will, you can place your assets in a trust. Trusts are far more difficult to challenge in court.
- Trusts can protect you against possible guardianship issues. Obviously, we recommend that everyone have powers of attorney in place to provide for continuity of decision-making for financial and medical concerns in the event that you are someday left incapacitated. Even with that protection, however, it is helpful to have another legal protection in place to protect your assets when the worst comes to pass.
With a power of attorney, there are often complications when certain organizations and institutions try to reject the authority you’ve granted to your agent. That can lead to delays in decision-making that can sometimes cause bills to go unpaid, or outright losses to occur. With a trust, your successor trustee has immediate authority to take over management of those assets and act in accordance with your instructions.
- Trusts can help you ensure that your legacy has the impact you desire, by offering more detailed provisions for the maintenance of assets over time and the pace of distribution. You can, for example, include spendthrift provisions to ensure that a wasteful heir doesn’t frivolously spend his entire inheritance in a drunken binge in Vegas. With the right provisions included in the text of the trust document, you can even ensure that an heir’s creditors cannot gain access to the trust’s funds.
There Might Be Drawbacks Too
Naturally, there are some disadvantages as well. For example, you do have to get even more organized if you’re going to use a revocable trust to manage assets. You also need to ensure that your trust is properly funded – and that means taking the time to ensure that you retitle assets to transfer ownership from your person to the trust. And then, of course, there is the simple fact that your revocable trust represents a larger cost expenditure at the front end of the estate planning process. Because it is a complex legal arrangement, you want to make sure that everything is done properly – and that costs a little money.
While there are do-it-yourself toolkits for creating a trust yourself, you should instead choose a reliable trusts attorney for the job. A lawyer can help you ensure that your own revocable trust is custom-designed to match your unique circumstances and needs, so that you avoid a generic document that fails to accomplish your larger goals.
At Biddinger & Estelle, PC, our trusts attorneys can assist you with every stage of the trust creation process. We’ll help you evaluate your assets and determine which ones will benefit most from being held in trust. More importantly, we’ll make sure that you avoid many of the most common problems that can occur when people try to create these arrangements on their own. If you’d like to know more about how revocable trusts can benefit your estate planning, contact us online or call us today at (989) 872-5601.