A Revocable Living Trust is a commonly used estate planning tool. It works in conjunction with ancillary documents such as a Pour-Over-Will, Financial Powers of Attorney, Medical Powers of Attorney, the Living Will, HIPAA Releases, and Organ Donation forms. “Revocable” means that the Trust can be revoked or amended at any time. “Living” means that you create the Trust while you are alive. And, a “Trust” is a type of contract.
Here is a summary of Revocable Living Trust benefits:
- You remain in control. When you use a Revocable Living Trust as an estate planning tool, you remain in control. You can change the terms of the Trust at any time you are alive and well. You can put assets in or take assets out of the Trust at will. In most cases, you are the Trustmaker (the person who created the Trust), the Trustee (the person who legally owns trust assets and is in charge of the Trust), and the beneficiary of the Trust. You even remain in control should you become disabled and when you die as you are leaving specific instructions as to what you want to happen. The Trust speaks for you when you cannot.
- The Trust takes care of you while you’re alive. Unlike a Will, which is effective only after your death, the Revocable Living Trust defines when you are disabled (usually a mental disability wherein you cannot manage your finances or day to day affairs). The Trust also includes provisions as to who will step up and manage your property and see to your care. This person is often called a “Disability Trustee.”
- You can protect your spouse’s and children’s inheritance. With a Revocable Living Trust, you can give asset protection to your spouse and children that you can’t get for yourself domestically. Give your gift in a trust instead of outright and you can keep it from disappearing in a divorce, bankruptcy, lawsuit, medical crisis, or addiction.
Consult a qualified estate planning attorney if you have questions about these tips or about Revocable Living Trusts in general.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.