Estate planning offers many tools to meet the specific needs of individuals and families. Trusts are a popular method to minimize estate taxes and provide other benefits. Among the types of trusts available, revocable living trusts (“RLTs”) offer the most flexibility and can offer benefits during the life and after the death of the trust maker (also called the “settlor”).
Creating a revocable living trust can reduce financial strain for beneficiaries now and in the future while also maximizing available assets. At Pierro, Connor & Strauss, we can determine whether a revocable trust or another estate planning vehicle is right for your situation.
What is a revocable trust?
Trusts are legal entities that separate the rights of ownership. The trust’s settlor has the right to make decisions about how the trust is created and about any property that is transferred to the trust. The beneficiary has the right to receive the benefits of the trust property. The trustee manages the trust assets according to its instructions.
When a living trust is revocable, it can be modified or revoked at the will of the settlor, allowing some measure of control during his or her lifetime. Revocable living trusts allow individuals to plan for how they want property to be managed during their lifetime or distributed after death. Irrevocable living trusts, by contrast, can only be changed in limited circumstances but offer greater asset protection.
A revocable living trust allows for flexibility, but it does not offer the same protections and benefits of irrevocable living trusts and other estate planning tools. However, a revocable living trust can be created in conjunction with other estate planning documents to achieve specific goals. Each situation is unique so speak with a living trust planning lawyer to decide whether a revocable living trust is a good option in your case.
Benefits of revocable living trusts
In addition to the peace of mind that comes with having a plan in place for one’s assets, revocable living trusts can provide practical and financial benefits. Some advantages can include:
- Minimizing probate. Property that is already held in a trust at the time of the settlor’s death may bypass the probate process, saving the estate time and money. At death, the trust becomes irrevocable, and the property can be used to settle the creator’s taxes and debts before transfer to the estate or another named beneficiary.