What Is a Revocable Living Trust?
When it comes to estate planning, ensuring your assets are distributed according to your wishes while minimizing complications for your loved ones is key. A revocable living trust is a powerful tool that offers flexibility, control, and privacy, making it a cornerstone of many estate plans. But what exactly is a revocable living trust, and how does it work? We explore this vital estate planning instrument below. To discuss how a revocable living trust might fit into your specific needs and goals in Los Angeles or the San Gabriel Valley, contact Blasser Law to sit down with our experienced and dedicated Claremont estate planning trust attorneys.
Defining a Revocable Living Trust
A revocable living trust is a legal document that allows you to place your assets in trust during your lifetime, with provisions for how those assets will be managed and distributed after your death. The trust becomes the legal titleholder of the assets, which are held for the benefit of the beneficiaries you name in the trust. The term “revocable” means that you can modify, amend, or terminate the trust at any time as long as you are mentally competent.
When you create a revocable living trust, you will typically name yourself as the trustee, giving you full control over the assets. You’ll also designate a successor trustee to manage the trust in the event of your incapacity or death.
How Does a Revocable Living Trust Work?
Here’s how a revocable living trust functions:
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Creation: You work with an estate planning attorney who will draft the trust document. This document outlines the terms of the trust, including how assets will be managed during your lifetime and distributed after your death.
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Funding the Trust: You transfer ownership of assets—such as real estate, bank accounts, and investments—into the trust. While the trust technically owns these assets, you retain control over them as the trustee.
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Management During Your Lifetime: As the trustee, you manage the assets in the trust just as you would if they were in your name. This means you can buy, sell, or use the assets as you see fit.
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Transition Upon Incapacity or Death: If you become incapacitated, the successor trustee steps in to manage the trust according to your instructions. Upon your death, the trustee distributes the assets to the named beneficiaries without the need for probate.
Benefits of a Revocable Living Trust
A revocable living trust offers several advantages over other estate planning tools:
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Avoiding Probate: Assets in a trust are not subject to probate, which can save time and reduce costs during estate administration.
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Privacy: Unlike a will, which becomes a public record during probate, the terms of a trust remain private.
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Flexibility: You can amend or revoke the trust as your circumstances or wishes change.
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Incapacity Planning: A trust ensures seamless management of your assets if you become unable to manage them yourself.
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Control Over Distribution: You can specify how and when beneficiaries receive their inheritance, such as in installments or upon reaching certain milestones.
Other Considerations
While a revocable living trust has many benefits, there are some considerations to keep in mind:
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Initial Costs: Setting up a trust may involve higher upfront legal fees compared to creating a simple will.
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Funding the Trust: You must transfer assets into the trust, which can require additional effort and oversight.
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No Estate Tax Benefits: Since the trust is revocable, the assets are still considered part of your estate for tax purposes. Estate taxes are typically not a concern except for the very wealthy, though.
Is a Revocable Living Trust Right for You?
A revocable living trust is not one-size-fits-all, but it can be an invaluable tool for individuals with significant assets, those who want to avoid probate, or those concerned about incapacity. At Blasser Law, we help clients in Claremont, Los Angeles, and the San Gabriel Valley create customized estate plans that meet their unique needs and goals.
If you’re considering a revocable living trust or have questions about other estate planning tools, contact us today at 877-927-2181 to schedule a free consultation. Together, we can help secure your legacy and provide peace of mind for you and your loved ones.