When you create a revocable trust, you’re removing some of the more complicated aspects of estate planning. Learn more about how it works and what’s the process.
Author: Paul Black
Paul’s experience as the son of two parents with big health challenges is what led him to the work he does today and gives him first-hand knowledge of the challenges that many caregivers and family members face. After graduation from GSU Law, Paul was chosen from dozens of applicants nationwide as one of three 2010-2011 Borchard Foundation Law & Aging Fellows. Paul has been named as a SuperLawyers “Rising Star” in the area of Estate Planning and as a member of Georgia’s “Legal Elite” by Georgia Trend magazine. Published on: July 02, 2022.
What Is a Revocable Trust?
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A revocable trust is a trust in which a grantor places their assets while they are still alive so that the assets can be released to the beneficiaries upon their death. It is also called a revocable living trust.
Revocable living trusts can be advantageous because they are an effective way of estate planning. They preserve all your assets while providing a safety net for your family when you are not there.
What Is the Difference Between a Revocable and Irrevocable Trust?
A revocable trust allows the trustee to modify the trust anytime while they are still alive. They may even choose to terminate it if they wish. However, a revocable living trust becomes irrevocable if there is no successor trustee upon death.
You may be asking yourself, can an irrevocable trust be changed? For an irrevocable trust, no one can alter the provisions of the assets placed inside them for life. Not even the creator of the trust can change it. In an irrevocable trust, the trustee surrenders all ownership rights to the assets once they sign off.
However, this does not mean that an irrevocable trust is immune to change. According to federal law, you can change an irrevocable trust but only under particular circumstances. With the help of an experienced trust lawyer or law firm, you can potentially make changes via an irrevocable trust amendment.
Do I Need a Revocable Trust and How Does It Work?
In order to appreciate the benefits of a revocable trust, you need to understand how it works.
Revocable trusts allow you to alter the trust as you wish. This is particularly helpful if you set up a trust while you are still young as circumstances can change, and you may want to change the beneficiaries in your trust.
Assets in a revocable trust avoid probate court. Probate is a legal process of distributing your assets. With a revocable trust, the grantor can pass their assets without a court order– a slow process that can take months.
Assets in a revocable trust can receive up to $1,250,000 in insurance, according to the Federal Deposit Insurance Corporation.
A revocable trust is private. Only the parties involved are aware of the revocable trust document, which is not kept as part of public record.
It assists in the event of incapacitation of the trustee. Your chosen successor trustee usually steps in and manages your assets. This avoids a court-appointed conservatorship for your estate.
Revocable Trust Beneficiary
These are people like family or organizations set to benefit from assets contained in a revocable living trust. These people may include;
Spouse of the grantor
Children of the grantor, whether minors or young adults, including children from prior marriages.
Corporations and institutions
You are not limited in the number of beneficiaries you can include in a revocable living trust.
In addition, for every primary beneficiary that the grantor names, they can also name an alternate beneficiary.
How Much Should a Revocable Trust Cost?
The cost of a revocable living trust can vary depending on the assets (also called the trust’s principal) that go into the trust. An asset’s appreciation or depreciation may cause this variation in cost.
This is where drafting a living trust becomes more complex than a regular will and requires a competent trust lawyer, especially if the assets are valuable.
However, in the long run, the expenses for setting up a revocable trust are less than those your loved ones could incur if the decision for your assets goes into probate.
How Can a Revocable Trust Attorney Help?
Due to the sensitive and complex nature of living trusts, you might want to consider the services of a trust attorney or law firm to properly plan your estate
The Law Office of Paul Black can guide you through making a living trust. A trust attorney or lawyer can be beneficial to your estate for tax purposes.
Various other situations may require you to seek the services of a trust lawyer or law firm. For example;
- You might need legal help in transferring your assets. This is done using a deed, and your trust lawyer can help draft this document.
- You may need a legal entity like a living trust lawyer to draft an estate plan and set up the trust’s terms.
- If you are planning to create a trust and a will, and you aren’t sure what to include in either. Trust attorneys can often provide the necessary information and legal resources to plan your property.
- If you put conditions in your revocable living trust. For example, beneficiaries inheriting portions of your trust or money when they reach certain ages.
- If your estate is more extensive than $11.18 million, you may want to consider hiring a trust attorney to help minimize the estate tax set by federal government law. In addition to this, each state has different estate taxes. Your estate lawyer will help protect you from paying a lot of taxes on your property.
- A trust attorney or lawyer will also help you draft a living trust that will avoid creditors being able to use your assets as collateral upon your death.
- If you intend to skip a generation in the distribution of your estate, such as putting your grandchildren as beneficiaries, you will attract a hefty federal inheritance tax of 40%. You will want to work with a trust attorney or lawyer in this particular situation.
Get in Touch With an Estate Planning Attorney
A revocable living trust is a financial move that you will want to consider if you want the continuity of your estate in the right hands.
So, are you ready to open a revocable trust? Get in touch with the Law Office of Paul Black, an experienced estate planning attorney at 404-410-6820 or email the office at [email protected].
He will answer all your questions regarding revocable trusts and potentially minimize your estate tax and other estate planning costs.
What Should You Not Put in a Revocable Trust?
According to federal law, the assets that can’t go into a trust include; retirement accounts, medical savings accounts, active financial accounts that you pay bills with, and motor vehicles.
Is a Revocable Living Trust Worth it?
Yes. You may enjoy peace of mind knowing that the prosperity of your family will continue even upon your death. They won’t have to wait for probate to decide on your estate.
If you have a family member with special needs, it can be beneficial to them, setting them up for life in your absence. And if you decide to create the trust for a charitable cause, you can rest easy knowing that you cared for the less fortunate.
Who Is in Control of a Revocable Trust?
The trustee is usually in control of a revocable trust. They keep track of the income and estate taxes. However, if a trustee is incapacitated or is deceased, the person they have named successor trustee assumes the role of controlling a living trust.
Do Revocable Trusts Protect you From Lawsuits?
Putting your assets in living trusts does not guarantee that you will be immune to lawsuits. As long as the trustee owns property and assets in the trust, they can suffer a lawsuit against themselves.
This is why you need the services of an experienced trust attorney or law firm to interpret estate law and provide you with all the legal resources you need to navigate the hurdles of revocable trusts.