Want to make sure your estate planning is done right? Learn all about revocable living trusts and how this legal document can protect your assets.
What Is a Revocable Living Trust?
A revocable living trust is a legal document that allows you to manage your assets during your lifetime and transfer those assets to designated beneficiaries after you die. It is revocable because the maker of the trust, also known as the grantor or settlor, can change its terms at any time during their lifetime. The trust includes instructions regarding how the asset should be managed and eventually distributed when the settlor becomes incapacitated or dies. It provides control over how assets can be distributed upon one’s death and makes it much easier for the heirs to avoid probate court.
What Assets Can You Place in a Living Trust?
You can place virtually any kind of asset into a living trust, including real estate, investments, cash, and personal items. All of these assets will be subject to the conditions outlined in the trust agreement. For example, the trust could include instructions that a home should go to one beneficiary while other assets are divided amongst multiple beneficiaries. Placing assets in a revocable living trust allows you to control how those funds are distributed after your death and prevents them from winding up in probate court.
Who Should Make a Revocable Living Trust?
Anyone who wishes to protect their assets should consider creating a revocable living trust. It can provide peace of mind that your wishes will be followed and prevent your estate from winding up in probate court. Furthermore, if you have minor children or dependents, a living trust is especially important for organizing the management of those funds until they reach adulthood. A trusted estate planning attorney can help draft and maintain the trust document so that it remains valid over time.
What Are the Benefits of a Living Trust?
A revocable living trust allows assets to be passed down without the need for probate. This process can be costly and time consuming, which is why having a living trust allows you to bypass it altogether. Additionally, it provides privacy as your estate is not public information and no court appearances are necessary. It also allows you to manage your affairs should you become incapacitated so that someone else has the legal authority to do so. Finally, creating a living trust can potentially save your family or heirs money by avoiding unnecessary taxes and fees associated with a will or other estate planning methods.
How Do You Create and Fund a Revocable Living Trust?
Creating a revocable living trust is simple and straightforward, but it’s important to consider the implications carefully. Generally, you must determine trustees and beneficiaries, create the trust document, fund the trust with assets, and properly manage your assets according to the terms of the trust agreement. To fund a living trust, you will need to transfer ownership or title of your assets into the name of the trust. This can be done through a variety of methods such as retitling real estate or changing beneficiary designations on life insurance policies. Once funded, all future distributions from these assets should flow through the trust for easy wealth management.
How much does a Revocable Living Trust Cost?
The cost of a revocable living trust can vary widely depending on whether you create your own living trust, whether you pay for a do-it-yourself software, or whether you pay an attorney to draft the living trust for you. If you do it yourself, the price can vary anywhere from a few hundred dollars to almost a thousand dollars. If you hire an attorney, the price typically starts at $500 and can increase to several thousand dollars.