What is a revocable living trust?
A trust is an arrangement in which one person agrees to hold property for the benefit of another. Every trust generally includes the following:
- The Grantor (also known as the Settlor or Trustor) who establishes the trust
- The trustee who holds and manages the assets of the trust for the benefit of another person
- The trust corpus or property held by the trustee for the benefit of another person and
- The beneficiary who receives the assets of the trust as directed by the trustee according to the provisions of the trust.
When properly funded, a revocable living trust allows you to control your assets during your lifetime as well as after you die. Because the trust is “revocable,” you may alter or amend it at any time. A revocable living trust is not a separate taxable entity and does not require the filing of a separate tax return.
Why a revocable living trust should be part of your estate plan?
A revocable living trust should be included in your estate plan if you want to:
- Control your assets during lifetime and after you die without court interference
- Keep your affairs private and provide for quick distribution to your beneficiaries after your death
- Avoid the time and expense of probate
- Protect your assets for your spouse and family upon your death
- Allow those you love and trust to make decisions regarding your capacity without waiting for a physician’s letter that may never come
- Avoid the necessity to appoint a guardian or conservator of your estate.
Do I still need a will if I have a revocable living trust?
Even if your estate plan includes a living trust, you still need a will. Often not all of your property will be able to be owned by your living trust. Sometimes this occurs by neglect because you failed to complete the necessary paperwork. In these situations, your property will need to pass through probate. Without a will you would lose control over the assets and they would be distributed in accordance with the states intestacy law.
In addition, your will can provide that your assets going through probate get distributed in accordance with the provisions set forth in your living trust. This is often referred to as a “pour over will”. By including this type of will in your estate plan, you can ensure that the assets passing to your beneficiaries through your will are protected against claims from creditors and predators.