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Do You Need a Revocable Trust?

Do You Need a Revocable Trust?

Do you need a revocable trust? Let's begin by defining what this is. A revocable trust is a living trust that allows flexibility to change the trust due to lifestyle changes. The creator modifies the trust based on marriage, divorce, children, addition/removal of assets, or the demise of a beneficiary. Returning to the question in the first sentence, the choice of a will or the life insurance beneficiary policy makes choosing a revocable trust over those two a difficult task. Consider the subsequent advice.

The type of asset: a revocable trust is excessive if you don't own many assets. Your life insurance, an attorney, and a will can cover most small estates. If you own a lot of real estate, shares, bank accounts, vehicles and valuables, a revocable trust is your best bet.

The location of assets: every state carries out estate and inheritance differently. A revocable trust will make sure every inch of your estate is carried out the way you intended. Unlike a will, no state line will halt a revocable trust.

The family business: a startup, sole proprietorship, partnership, or corporation is better off with a revocable trust than a will. With a revocable trust, the business will continue to run smoothly through the appointed trustee. A will slows everything down because it has to decide who owns the business first. A personal representative will temporarily run the business until there is a permanent solution. It can take months to sort all this out.

The beneficiaries under 18: a revocable trust is great for minors because it operates without probate. You can also choose a will for minors called a testamentary trust; however, it needs to pass probate court before activation.

The privacy vs. probate: probate lists the heirs, their addresses, their cut of the estate and the creator's outstanding debt in various documents accessible to the public. If you feel that your estate is no one else's business, opt for a revocable trust. The only people who can see that information are the heirs and trustee successors.

The possibility of contesting: in some states and situations, a will is better due to limitations on filing - a 2-3 month window. In other states, a trust is stronger because it is harder to contest in court. Select the stronger one based on state law. You can also get both a will and a revocable trust.

The health of the creator: with a revocable trust, the trustee will continue to guard your estate in case you can't do so yourself. It is not possible with a will.

It's never easy discussing your estate. There's not a right or wrong answer when there's a lot to consider. Contact us for more information on estate planning to make sure your loved ones' future is secure.

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