A revocable living trust can improve your estate plan in many important ways. While there are numerous advantages to having a revocable living trust, the following is a list of some of the more important advantages:
- Avoids expenses and fees associated with probate: The probate process can be expensive and time consuming. Your Last Will and Testament will need to be filed with a court and access to the information is public record. Probate provides a forum for disgruntled heirs to bring disputes without paying legal fees and court costs. If your property is held in a revocable trust and there are no probate assets, then a disgruntled heir would have to commence an action in court and incur the associated costs.
- Ensures your Family’s Privacy Following Incapacity or Death: By transferring your assets to a revocable trust, the assets held by the revocable trust will be in the control of your trustee upon your incapacity or death. Guardianship proceedings and probate proceedings require court involvement and the court’s file is available to the public.
- One Planning Document with Instructions for your Care upon Incapacity: A power of attorney will not have instructions on how you wish for your financial affairs to be handled during your incapacity. A revocable trust can and should provide instructions to your trustee on how your financial affairs will be handled during incapacity.
- Ensures that Your Trustee will be able to Manage your Financial Affairs: A power of attorney is not effective upon your death. Unless your attorney-in-fact is able to establish that you are still alive, an institution may be unwilling to honor the power of attorney. This could be an issue if you are traveling, in a hospital, or otherwise unable to prove that you are living. A revocable trust provides the trustee with authority over the assets held in the trust during your life, incapacity, and death.
- One Planning Document with Instructions for the care of your Loved Ones upon your Incapacity or Death: A Power of Attorney will not provide your attorney-in-fact with instructions on how your loved ones are to be provided for upon your incapacity or death. A Will provides no authority to the executor or executrix until the Will has been admitted to probate, which can be a slow process. The trustee of your revocable trust will have the authority to provide for your loved ones during your incapacity or death, in accordance with your wishes as expressed in the trust document.
- A Revocable Trust is a more Appropriate Beneficiary of a Life Insurance Policy then your Estate or an Individual: If your estate is named as the beneficiary of your life insurance policy, then the life insurance proceeds will be subject to the creditors of your estate. If you name an individual as a beneficiary of your estate, then the life insurance proceeds will be subject to the individual’s creditors. Also, if the individual you name as the beneficiary of your life insurance policy is receiving government benefits through a means tested program (i.e., Medicaid), the life insurance proceeds received by the individual will create a period of ineligibility. Through a revocable trust, you can have the life insurance proceeds continue in trust for the benefit of a beneficiary with creditor issues or who is receiving government assistance; while allowing the life insurance proceeds to be held for the benefit of the beneficiary without subjecting the proceeds to the claims of the beneficiary’s creditors or creating a period of ineligibility from government programs.
Comments
Post has no comments.