What is a Revocable Living Trust?
A RLT is a legal document that controls your property while you are living. Instead of creating a will that only goes into effect after you die, a revocable living trust goes into effect as soon as you sign the document and fund your trust. The person that creates the trust or grantor usually serves as the trustee controlling their own property. When the trustee or grantor passes away a new trustee takes their place and distributes the trust to the beneficiaries.
Why Do You Need a RLT?
- To take care of your Spouse and children. If you suddenly pass away your spouse and children will be left to deal with bank accounts, real estate transfers, retirement accounts, estate taxes, lawyers and government officials. Nobody wants to do this! A well drafted RLT takes care of your family and demonstrates how much you actually care and love them because they will not have go through this horrific process.
- To protect you and your family from creditors. A well drafted RLT will save you thousands of dollars in Estate Taxes that usually run 40%. Trusts are also drafted to protect beneficiaries from creditors, bankruptcy and ex-spouses. If you have a special needs child or grandchild a separate trust can be set up so that crucial government benefits are retained instead of losing valuable assistance.
- Probate Avoidance. Probate requires a judge to sign off on all your very personal documents and is public, time consuming, costly and involves risk. You will still need to Administer the Trust through the courts but it’s faster, cheaper and avoids more risk.
The RLT is not for everyone, however, it does work for a variety of individuals and is a great Estate Planning device that will protect your family, save you money and avoid the court room.
What Should I Watch Out For?
- Do it Yourself Legal…there are many software programs that you can buy and books that will show you how to Draft a Trust. You get what you pay for. Why would you risk your entire legacy or everything you obtained in life for a few thousand?
- Trust Mills. They offer free “seminars” and charge you low amounts and then do not fund your trust or follow up with you to keep your documents up to date. Again…Why would you risk your entire legacy or everything you obtained in life for a few thousand?