What Is a Revocable Living Trust?
A revocable living trust allows you to determine who will receive your property upon your death. Since you create this trust while you are still living, it is “revocable” due to the fact that you can alter the trust according to changes in your circumstances or desires. An estate planning lawyer can help you determine whether you should include this type of trust in your estate plan. At Sumner & Associates, P.C. we can also guide you through the estate planning process and ensure that you protect yourself and your loved ones. Contact us today.
When Do People Use a Revocable Living Trust Instead of a Will?
Most people choose to use a revocable living trust in their estate plan for three main reasons:
- It allows you to avoid probate.
- The trust provides for property management if you become incapacitated.
- You can keep your estate plan private.
What Does the Trust Document Include?
When creating a living trust, you sign a written trust document with a notarized signature. The document establishes the following:
- Names you as the trustee. The trustee has the power manage the property.
- Designates a successor trustee. The successor trustee will take over managing the property after your death or incapacity.
- Names the beneficiaries of the property. The beneficiaries will receive the property (or shares of the property) on your death.
- Makes provisions for you to amend or revoke the trust at any time while are you are alive. After your death, the trust becomes irrevocable.
Transferring Your Property Into the Trust
After you create the trust, you must transfer any property you want covered into it. If you have titled property, e.g. real estate, you have to execute a new deed (where you hold the property as the trustee). Likewise, if the property has title documents, you must change the name on the title. This applies to property such as bank accounts, vehicles, and securities.
For property without title documents, such as jewelry and antiques, you can list them on a schedule accompanying the trust document. Or you can transfer the ownership of certain assets to the trustee on a separate document.
Managing the Trust Property
While you are alive, you have total control over your trust assets. You can use the property (in addition to any generated income) however you may wish.
But what if you want to sell or refinance the trust assets? In that case, you have two options:
- Sell/refinance the property as the trustee of the trust, or
- Transfer the trust property back to your name.
Amending or Revoking the Trust
If you want to amend or revoke the trust while you are alive, you can do so with a signed notarized document. An example of when you would need to do this is if you wanted to change the successor trustee. Another example is if you wanted to add or remove beneficiaries from the trust, or make changes to how much of the assets they should receive.
What Happens If You Are Incapacitated?
In the event that you are unable to manage the trust yourself, your successor trustee will take over and manage the trust for you. The successor trustee is responsible for making sure that your bills are paid and that you are taken care of without the need for the court to intervene.
What Happens When You Die?
Upon your death, the successor trustee will pay your debts and taxes. He or she will also distribute the trust assets to the beneficiaries of the trust, according to the trust terms. If you have a properly drafted trust, your estate can avoid the probate process. If you don’t have any assets in your name when you pass, there is no probate needed to transfer title to your heirs.
What if some probate assets were not transferred into the trust? In that case, your estate may qualify for simplified probate procedures (these are available for smaller estates).
What Are the Pros and Cons of a Revocable Living Trust?
While a popular estate planning tool, a revocable trust does come with advantages and disadvantages. An experienced estate planning attorney can help you decide whether a revocable living trust is best suited to your needs.
Advantages of a Revocable Living Trust
- Avoids probate delays and expenses.
- Avoids probate proceedings in other states.
- Allows you to plan for your incapacity.
- Keeps your estate plan private.
- Provides for your estate to be administered by an out-of-state trustee.
- Provides for easier amending than a will does.
Disadvantages of a Revocable Living Trust
- Requires more effort to maintain than a will does.
- Can be more burdensome when it comes to owning assets.
- Doesn’t provide as much oversight as to how the estate is administered.
- Costs more to create depending on where you live.
Speak to a Michigan Estate Planning Lawyer Today
An experienced estate planning attorney can review your estate and advise you as to whether a revocable living trust is a good option for your particular situation. Call Sumner & Associates, P.C. today to learn more.