WHAT IS A REVOCABLE TRUST?
A revocable trust is a legal document in which you transfer your property to another party (the Trustee) who holds and manages it for the benefit of yet another party (the Beneficiary). A revocable trust becomes effective the moment it is signed. Consider the following analogy. A revocable trust can be compared to a suitcase. In it, you place all of your assets. You carry the suitcase and manage its contents during your life (assuming you are the trustee of your trust) and upon your death, the suitcase and all of its contents are automatically delivered to your loved ones, without court proceedings. Having obtained and filled the suitcase, the analogy continues, you may specify who carries it, including who carries it when you become incompetent or when you die and who receives the contents upon your death, assuming that you want the contents distributed then. The terms of the trust specify what you intend.
WHAT ARE THE BENEFITS OF A REVOCABLE TRUST? There are many good reasons to form a revocable trust:
- Avoiding probate. By creating a trust and transferring all your assets into it, you can avoid the process of probating a will at the time of your death. (This goal becomes particularly important if you own properties in more than one state. With a trust, you can avoid probating the will in all the states where you own property).
- Privacy. A trust allows you to maintain privacy about your beneficiaries and the assets in your estate. The creation and funding of a trust are private matters and not matters of public record, unlike wills and probate proceedings.
- Trustees. You may want the assistance of another person or institution to manage your assets now or in the future, when you are less able to do so yourself. By the same token, you may want this management assistance for some or all of your loved ones after your death. In your trust, you will be able to set out provisions in which you appoint specific agents to serve in these positions.
- Avoiding will contest. If you have reason to believe that there might be squabbling over your estate, a trust is a strong statement of your intentions, which is harder for contestants to attack. IF I CREATE A TRUST, DO I STILL NEED A WILL? When we prepare your revocable trust, we will also prepare a simple will for you as an additional safeguard. If you die without all your property in the trust, this will can then be probated and “pour over” your probate assets into your trust, hence the name “pour-over” will.