Living trusts have becoming an increasingly common and popular choice in estate planning in recent years because they offer a unique and smart way to protect your assets both while you are still capable of managing them and after you have passed away or fallen ill. A revocable living trust is a specific type of trust that differs from other trusts in important ways.
Trust versus Will
One of the main things a trust does is replace many of the functions of a will. You may still choose to have a will in addition to the trust to take care of any property that you do not incorporate into the trust. However, the main advantage of a trust as opposed to a will is that it does not need to be filed in probate court, which allows individuals a greater degree of privacy as there is no public record of all the assets in their possession.
A Revocable Living Trust
All trusts are entities into which one transfers their assets. The assets then become property of the trust rather than the individual. A revocable living trust is used so that individuals can put all of their property into a single location, allowing it to be distributed quickly and easily when the time comes for that process. The trust takes effect immediately, which is why it is called "living." The opposite type of trust is called a testamentary trust, and does not take effect until the person dies. At that point, their assets are transferred into the trust for disposal.
Controlling a Trust
In the meantime, most people choose to name themselves as the trustee as long as they are alive and competent, which means that they retain control over their assets even though the trust owns the assets rather than the individual. Revocable trusts can be changed, altered, or even dissolved at the discretion of the person who creates them as long as they are competent, at any time, and for any reason. In this way, this type of trust offers the greatest degree of flexibility while providing the degree of protection and privacy desired by people considering a trust.
To summarize, some of the advantages to a revocable living trust include:
- flexibility to change or dissolve the trust while you're alive
- Ability to serve as the trustee of your own trust
- Privacy because no will needs to be filed
- Savings after death because avoids the costs and delays of probate court
These flexible trusts are a great choice for many people. If you are interested in this or other options regarding trusts and estate planning, it is important to consult someone with knowledge and experience before making these important decisions.
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