Revocable Living Trust
A trust is an estate planning tool used to manage and distribute property according to the your wishes. A revocable living trust is the most common kind of trust, and it allows you to maintain complete control over the trust and its property while you are still living. This trust can be amended at any time, terminated at any time, and you can add or withdraw property from the trust whenever you want. Once you die, the property is distributed to your chosen beneficiaries in exactly the manner you have prescribed.
Benefits of a Revocable Trust
- Avoids Probate. Having a revocable trust in place allows your property to be transferred to your beneficiaries without having to go through probate court. This means that the beneficiaries will receive the property faster, they won’t have to pay probate fees, they won’t have to hire a Utah estate planning attorney or Utah probate attorney, and they will avoid unnecessary stress and grief.
- Flexibility in Asset Distribution. A revocable trust allows for much more flexibility than a will. You can provide for who the beneficiaries of the trust should be, but you can also provide instructions for how much of your property these beneficiaries receive. You can dictate when certain individuals should receive property (i.e. not until the age of 25 years old). Additionally, in some cases you can even provide for what certain assets should be used for.
- Privacy. Trusts are not public record. Wills and other probate actions are public record, available for inspection by anyone. Privacy can be important for a variety of reasons, but one of the most common is when a person decides to distribute their property unequally between children. Privacy can avoid family contention. Additionally, if one your listed beneficiaries is in the middle of a divorce, or is preparing to file for bankruptcy, or has significant debt, it may be best for that beneficiary if his/her inheritance is kept private.
- Real Property Outside the State. If you have real property in another state, you can avoid a significant amount of time and expenses by holding this property in a trust. If an individual owns property in another state, and that property is not held in a trust, the property will need to be probated and the other state’s probate laws may significantly complicate the process.
- Avoid Court Appointed Conservators. When an individual becomes disabled or incapacitated, a court may need to appoint a conservator to administer the individual’s estate. Conservatorships are generally unpleasant and can be expensive. A revocable trust allows for your property to be managed by a trustee according to your wishes, even if you are incapacitated.
Disadvantages of a Revocable Trust
While revocable trusts are one of the most powerful estate planning tools, there are some things they cannot do. Such as:
- No Tax Savings. Revocable trusts do not save or reduce an individual’s estate or income taxes.
- No Creditor Protection. In the event that you are sued, or that another creditor were to come after your personal assets, a revocable trust would not offer any protection.
Revocable trusts do not have nearly as many disadvantages as wills. For this reason they are favored by most knowledgeable estate planning attorneys.