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Revocable trusts allow people to control assets during their lifetime while providing for the transfer of those assets to their beneficiaries after their death. Many people choose to manage their estates with the help of revocable trusts, which are also called living trusts, because they are flexible.
Essential Features of a Revocable Trust
Revocable trusts are a flexible and customizable estate planning tool that can offer a range of benefits for individuals. Here are some of the essential features of revocable trusts:
- Ownership and Control. With a revocable trust, the individual creating the trust (known as the grantor or settlor) retains ownership and control over the assets placed in the trust during their lifetime.
- Avoiding Probate. Assets held in a revocable trust are not subject to probate, which can help streamline the transfer of assets to beneficiaries and reduce costs and delays.
- Flexibility. Revocable trusts can be amended or revoked by the grantor at any time, allowing for changes to be made as circumstances or preferences change.
- Privacy. Unlike a will, a revocable trust is a private document that does not become part of the public record after the grantor's death.
- Disability Planning. A revocable trust can include provisions for managing assets in the event of the grantor's incapacity, providing a way to manage financial affairs without needing court intervention.
These are just a few qualities of revocable trusts. Still, there are many other factors to consider when deciding if a revocable trust is the right estate planning tool for you. Consulting with a legal professional can help ensure that you create a plan that meets your individual needs and goals.
Benefits of a Revocable Trust
Revocable trusts offer several advantages for individuals planning their estates. Here are some of the key advantages:
- Avoiding Probate. One of the primary advantages of a revocable trust is that it allows assets to pass to beneficiaries without going through the costly and time-consuming probate process. This can save beneficiaries time, money, and hassle in the event of the grantor's death.
- Control Over Assets. With a revocable trust, the grantor maintains control over their assets during their lifetime. This means they can change or revoke the trust at any time and retain the ability to manage their assets if they become incapacitated.
- Privacy. Unlike a will, which becomes a matter of public record after the grantor's death, a revocable trust is a private document. This can help protect the grantor's privacy and keep sensitive information from the public eye.
- Reduced Estate Tax Liability. Revocable trusts can be designed to minimize the grantor's estate tax liability, which can help maximize the number of assets that pass to beneficiaries.
- Asset Protection. A revocable trust can sometimes protect assets against creditors or other claims.
These are just a few of the many advantages of a revocable trust. However, it's important to note that every individual's situation is unique, and what works for one person may not be the best option for another. Consulting with an experienced estate planning attorney can help you determine whether a revocable trust is right for your specific circumstances.
How to Create a Revocable Trust
Here are the steps to create a revocable trust:
- Determine if a Revocable Trust is Right for You. Before creating a revocable trust, it's important to consider your circumstances and determine whether this type of trust is the best option for your needs. Consulting with an experienced estate planning attorney can help you determine whether a revocable trust is right for you.
- Choose a Trustee. The trustee manages the trust and distributes assets according to the grantor's wishes. This can be the grantor, a family member, or a professional trustee.
- Draft the Trust Document. The trust document is a legal document that outlines the terms of the trust, including the beneficiaries, assets to be included in the trust, and instructions for managing and distributing those assets. Working with an experienced estate planning attorney is important to ensure your trust document is properly drafted and legally binding.
- Fund the Trust. For the trust to be effective, assets must be transferred into the trust. This typically involves changing the assets' title to the trust's name.
- Sign and Notarize the Trust Document. Once drafted and funded, it must be signed and notarized per the law.
- Review and Update the Trust As Needed. Over time, your circumstances and wishes may change, and it's important to review and update your trust document as needed to ensure that it continues to reflect your wishes and goals.
Creating a revocable trust can be a complex process, and working with an experienced estate planning attorney is important to ensure that your trust is properly drafted and legally binding.
Steps to Modify a Revocable Trust
Modifying a revocable trust typically involves the following steps:
- Review the Trust Document. Review the trust document to determine what changes need to be made.
- Prepare an Amendment. Prepare an amendment that outlines the changes you wish to make to the trust. This amendment should be drafted following the law and reviewed by an experienced estate planning attorney to ensure it is legally valid.
- Execute the Amendment. Sign the amendment in the presence of a notary public and have it notarized.
- Notify the Trustee. Notify the trustee of the changes to the trust and provide them with a copy of the amendment.
- Update the Trust's Funding. If the changes to the trust involve adding or removing assets, it is important to update the trust's funding accordingly.
It is important to note that while a revocable trust can be modified, certain changes may require the creation of a new trust document. Working with an experienced estate planning attorney is also important to ensure that any changes to your revocable trust are properly executed and legally valid.
Key Terms for Revocable Trusts
- Grantor: The person who creates and funds the revocable trust.
- Trustee: The person or entity responsible for managing the trust assets and distributing them according to the terms of the trust.
- Beneficiary: The person or entity who receives the trust assets or income from the trust.
- Revocation: The act of canceling or annulling a trust.
- Funding: The process of transferring assets from the grantor's name to the name of the trust so that the trust owns them.
Final Thoughts on Revocable Trusts
A revocable trust can be a powerful estate planning tool for many individuals, offering a range of benefits such as privacy, flexibility, and the ability to avoid probate. It allows you to maintain control over your assets during your lifetime while providing a clear plan for how they will be managed and distributed after you pass away.
However, setting up a revocable trust requires careful consideration and planning, and it's important to work with a knowledgeable estate planning attorney to ensure that your wishes are accurately reflected in the trust documents. With proper guidance and planning, a revocable trust can effectively protect your assets and ensure that your loved ones are provided for according to your wishes.
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Meet some of our Revocable Trust Lawyers
Bryan B.
Experienced attorney and tax analyst with a history of working in the government and private industry. Skilled in Public Speaking, Contract Law, Corporate Governance, and Contract Negotiation. Strong professional graduate from Penn State Law.
Michael O.
A corporate and commercial attorney with experience in transactional legal services including corporate and finance transactions, mergers and acquisitions, real estate, commercial contracts, bankruptcy, restructuring, international business transactions and general counsel services. Additional background skills and experience include investment banking, financial analysis, and commercial litigation. Sectors covered include technology, media, franchises, and business services providers, from start-ups to medium and large enterprises.
Anand A.
Anand is an entrepreneur and attorney with a wide-ranging background. In his legal capacity, Anand has represented parties in (i) commercial finance, (ii) corporate, and (iii) real estate matters throughout the country, including New Jersey, Pennsylvania, Delaware, Arizona, and Georgia. He is well-versed in business formation and management, reviewing and negotiating contracts, advising clients on financing strategy, and various other arenas in which individuals and businesses commonly find themselves. As an entrepreneur, Anand is involved in the hospitality industry and commercial real estate. His approach to the legal practice is to treat clients fairly and provide the highest quality representation possible. Anand received his law degree from Rutgers University School of Law in 2013 and his Bachelor of Business Administration from Pace University, Lubin School of Business in 2007.
Justin K.
I have been practicing law exclusively in the areas of business and real estate transactions since joining the profession in 2003. I began my career in the Corporate/Finance department of Sidley's Los Angeles office. I am presently a solo practitioner/freelancer, and service both business- and attorney-clients in those roles.
September 22, 2022
Sarah S.
I have a background in Criminal Law, Family Law, Contract Law, and Environmental Law. I also have five (5) degrees in the following: Here are my degrees and background: 1) B.S. in Environmental, Soil, and Water Sciences 2) A.S. in Pre-Medical Sciences (anatomy, physiology, medical terminology) 3) A.S. in Aircraft Non-Destructive Inspection (science of x-rays, cracks in metal, liquid penetrant, magnetic particle inspections, ultrasonic inspections, and spectrophotometric oil analysis) 4) Master's in Natural Resources Law Studies (1 year focus in the environmental and pollution laws (Hazardous Waste Laws such as RCRA, CERCLA, FIFRA, Natural Resource laws such as ESA, CWA, CAA, FWPCA, Environmental Law, Sustainable Development, and Global Climate Change issues) 5) Juris Doctor and certificate in Native American Law
September 22, 2022
James G.
I am a lawyer in Glendale, Arizona. I have practiced in contract work including buy/sell agreements, contracts for the purchase of goods and services and real estate. I also practice in bankruptcy law and sports and entertainment law.
September 30, 2022
Gregory D.
Gregory S. Davis is a native of New York and is a graduate of the Norman Adrian Wiggins School of Law at Campbell University. He also holds an undergraduate degree in Economics from the Wharton School at the University of Pennsylvania and an MBA from Bowie State University. Prior to entering the practice of law, Greg was a Trust officer for one of the largest U.S. Banks, an adjunct professor of finance at Meredith College and a Series 7 licensed financial advisor. Greg is currently the owner of The Law Office of Gregory S. Davis, PLLC (gsdavislaw.com) focusing on Estate Planning, Real Estate and Business Law. Greg is also an adjunct professor of Business Law at Wake Tech.
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