What Is a Revocable Living Trust?
A Revocable Living Trust is a legal document that allows the grantor (the person who creates the trust) to take personal assets and transfer them to the ownership of the trust during his or her lifetime. While the trust technically owns the assets, the grantor can continue to use them as he or she normally would.
Generally, it is a good idea to place as many assets as possible into the trust to maximize its benefits. However, certain assets, such as life insurance and Individual Retirement Accounts, are not owned by the Revocable Living Trust during the grantor’s lifetime (although the Revocable Living Trust may be a beneficiary of such an asset).
When a Revocable Living Trust is established, the grantor is normally the beneficiary during his or her lifetime. The grantor names a trustee to manage the assets in the trust. Most grantors name themselves as trustee, giving them complete control over the trust’s assets. A successor trustee should also be named to take over management of the trust after the grantor passes away or if the grantor is incapacitated. The grantor can specify when heirs will receive their inheritances from the trust. This can prevent an heir from squandering an inheritance if he or she is not ready to manage money on his or her own.
What Is Trust Funding And Why Is It Essential?
What do we mean by the term “funding” a Revocable Living Trust? Essentially, it involves retitling your assets into the name of the trust, as well as making sure that the beneficiaries of any life insurance policies or retirement accounts coincide with the provisions of the trust. If you fail to fund your Revocable Living Trust, your estate plan won’t work as you intended.
The consequences of not properly funding your trust include:
Assets held outside the trust could be subject to probate, defeating one of the main benefits of creating the trust in the first place
Assets held outside the trust may not go to your intended beneficiaries
The bottom line is this: Make sure your Revocable Living Trust is properly funded. And, be sure to keep it up to date so that any changes in your personal and financial situation, together with those of your loved ones, can be taken into account. In this way you can be sure your Revocable Living Trust is helping you to accomplish all of your goals and maintain complete control over your affairs.
Is a Revocable Living Trust Right for Me?
Not everyone needs a Revocable Living Trust. It can, however, be an important part of your estate plan. Why might a Revocable Living Trust be right for you? On the most basic level, it allows you to keep complete control of your affairs and make sure you are taken care of if you are ever incapacitated. Upon your passing, a Revocable Living Trust can help make sure that your assets will go to the people you want, when you want, and in the manner you want.
Depending on your particular needs and goals, a Revocable Living Trust can help:
Avoid probate if your assets are appropriately aligned with the trust
Pass your values, work ethic, and sense of responsibility on to heirs
Reduce estate taxes
Keep your financial affairs and family information private
Protect the inheritances of your heirs and make sure your heirs are taken care of in the way you want
Leave an enduring legacy
In our crazy, scary world…especially right now, if you haven’t looked into a Revocable Living Trust, please consider doing so. If you have a Revocable Living Trust, has it been updated? If you are all set, do you have a family member who should be getting documents in place? Help spread the word – Getting an estate plan done (whether it is a Revocable Living Trust or only a Will) does not need to be painful or scary. It’s something we all need to do, and something we need to keep updated.