What Are the Benefits of Setting Up a Revocable Living Trust for Your Family?
Setting up a revocable living trust can come with benefits and determine how your wealth is passed down to your family. Here are the major benefits.
Did you know that less than half of all Americans have an estate plan in place? Many people think that a will is the only component of an estate plan. But, it’s far from the only thing you should include.
You also need to consider things like guardianship designations, power of attorney, and revocable living trust. Now, this type of living trust isn’t for everyone. But, for many people, it can save a lot of time and money.
So, what is a revocable living trust? And what are the benefits? If you want to know the answer to these questions, and more, you’re in the right place.
In this article, we’ll go over everything you need to know about this form of estate planning.
What Is a Revocable Living Trust?
A revocable living trust is one of the many forms of estate planning. It’s a legal document that gives another individual the authority to make decisions regarding another person’s assets.
This can include both their money and property. A living trust goes into effect if the individual who made it is unable to make financial decisions. This can be either because of illness or injury.
A revocable living trust also dictates who gets the money and property when the individual in question dies. There are three parties you need to know about with revocable living trusts.
The first is the person who creates the trust. They’re known as grantors, truster, or settlers. The person in charge of making decisions with the money and property is known as a trustee.
If there are two trustees, they’re known as co-trustees. Finally, the parties receiving money and/or property from the trust are the beneficiaries. As long as the grantor is alive, a revocable living trust is amendable.
But, most of the time, the second they pass away the document may become irrevocable.
1. Probate Avoidance
A probate proceeding is a process of proving that an individual's estate planning documents are valid. If there are no documents in place, then the probate court will decide to who the assets are administered. Setting up a Revocable Living Trust for your family can help you avoid probate, that is just one benefit of setting up a revocable living trust.
Probate proceedings are more expensive and also more time consuming. But, they can drag on even longer if you have real estate in multiple states, that may require multiple probates.
A revocable living trust properly created and funded is not subject to probate in Arizona. That means that you save time and money that can go to the beneficiaries instead of court proceedings.
2. Protection in Case of Disability
No one likes to think about getting a serious physical or mental disability. But the reality is that the older you get the more likely it becomes.
These sudden disabilities can be extremely problematic if you don’t have adequate funds set aside to pay them. That’s why a living trust is so important.
You can use your funds while you’re still alive to pay for any disability costs in the event you’re unable to make decisions. Without an attorney, in place, you would need a long and expensive process of putting a conservator in place.
This can take away valuable time from the care you require. And, even when a conservator is in place, the court will still oversee the management of all disbursements and investments.
3. Continued Management of Assets
A revocable trust is a great option for people who have their assets from the trust invested in a lot of different things.
Without a trust in place, registration of securities is required for someone else to manage these assets in the event of disability or death. The continued management of a revocable living trust helps you avoid this hassle.
What’s more, it allows any person that you declare trustee to manage the assets as you see fit. So, you can be certain that your investments will be in good hands.
4. Your Assets Are Available
When you pass away it will often take a long time for your beneficiaries to access any money you left them with just a will in place.
That’s a problem because the beneficiaries are often hit with estate taxes, administration taxes, and other types of debts.
With a living trust in place, any assets you have can immediately go toward these costs as long as the trustee approves of them.
5. Tax Reduction Possibility
Many people think that living trusts provide tax advantages for the grantor while they’re still alive. However, this simply isn’t the case. The reality is that you will still need to report any trust income on your tax returns.
However, that doesn’t mean that a living trust can’t reduce some of the taxes you owe. How? By allowing you to take advantage of certain tax credits and exemptions.
This, in turn, can reduce the amount of estate tax that you owe. This is specially important if you have more than $5 million in assets in your estate.
However, you should always seek the help of an experienced estate planning attorney if you want these services. It takes a lot of expertise to get these tax reductions.
Need Help With Estate Planning? Contact Citadel Law Firm
We hope this article helped you learn more about a revocable living trust. Still not sure if this form of estate planning is right for you? Your next step is to meet with a good attorney to discuss your options.
It’s important to pick a legal group like Citadel Law Firm to assist you. We have experience and a desire to educate you on the best option for your specific needs.
Check out our office locations, including Chandler, Arizona, and schedule your free consultation with an estate planning lawyer today. Call (480)565-8020 or click here to schedule your free consultation.
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