People sometimes harbor misconceptions when it comes to estate planning. They may overlook viable solutions because they do not know all the facts. With this in mind, we would like to look at a popular misconception about trusts.
Revocable Living Trusts
There are different types of trusts. If you are a high net worth individual who is exposed to the federal estate tax, you may want to use an irrevocable trust of some kind to remove assets from your taxable estate. You would be surrendering direct control of assets that you placed into this type of trust. This is why the assets would not be looked upon as part of your estate for tax purposes.
However, there are also revocable trusts. Revocable living trusts are very popular, and you do not lose control of assets that you convey into this type of trust. After all, look at the name: it is revocable. You can rescind or revoke the trust if you want to, and the assets would once again be in your direct personal possession.
The anatomy of a trust includes a trustee who administers the trust. There is also a beneficiary who receives monetary distributions from the trust. If you create a revocable living trust, you can act as the beneficiary and the trustee initially. This gives you complete control as the administrator and the person who can benefit from the trust.
When you create the trust agreement, you name a successor beneficiary or beneficiaries and a successor trustee. In the agreement you state your wishes regarding the distribution of the assets in the trust. After you die, the trustee distributes assets to the beneficiary or beneficiaries according to your wishes.
The major benefit that you gain when you create a revocable living trust is the avoidance of the legal process of probate. If you maintain direct personal possession of your property and you create a will to direct its distribution, the heirs to the estate don’t receive their inheritances right away. The executor must admit the will to probate first.
Probate can be time-consuming, taking somewhere in the vicinity of eight months to a year in simple cases. More complicated cases can take much longer.
Probate costs are a factor as well. During probate expenses will accumulate, and this will erode the value of the estate.
When you use a revocable living trust to facilitate the transfer of your monetary assets after you pass away, the distributions to the beneficiaries are not subject to the probate process. As a result, your heirs will receive their inheritances in a timely and efficient manner.
Revocable Living Trust Report
We have prepared a free special report on the benefits of revocable living trusts. If you would like to access this informative, in-depth report, click this link and follow the simple instructions: Revocable Living Trust Report.