It is important to gain an understanding of the vehicles of asset transfer that you can utilize when you are planning your estate. There are those who have misconceptions, and you can look past viable solutions if you do not know all the facts. With this in mind, we would like to look at revocable living trusts in this post.
Loss of Control?
Some people are under the impression that you lose personal control of assets when you place them into a trust. That’s the whole point of a trust, right?
You have to understand the fact that there are different types of trusts. Some trusts are irrevocable, meaning they cannot be rescinded or revoked. You do lose personal control of assets that you place into this type of trust.
These trusts are useful for those who want to gain estate tax efficiency and/or asset protection. Because you lose direct control of the resources, they would not be part of your taxable estate, and they could not be targeted by litigants seeking redress.
There are also revocable trusts. When you create a revocable living trust, you are in a different situation. As the name plainly states, you can in fact revoke the trust. If you choose to do so, it would no longer exist, and the assets in the trust would become your direct personal property.
The control does not stop there. The point of the trust is to facilitate future asset transfers to your heirs, so you are probably not going to want to revoke it. While you are living you can act as both the beneficiary and the trustee of the revocable living trust. Even while it is intact you control the actions of the trust, and you can receive monetary distributions from the trust.
You may wonder why someone would want a revocable living trust if they do not provide asset protection or estate tax efficiency. Though there are additional benefits, living trusts are primarily utilized to facilitate probate avoidance.
Probate is the legal process of estate administration. This process can be time-consuming, and it can be costly. If you use a last will to state your final wishes regarding the distribution of your monetary resources, the will must be admitted to probate.
If you use a revocable living trust instead, the trustee can distribute resources to the beneficiaries outside of the process of probate.
Free Report on Revocable Living Trusts
If you would like to learn more about the value of revocable living trusts, download our special report on the subject. This report is quite informative, and it is being offered free of charge at the present time. To access the report, click the following link: Living Trust Report.
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.