Estate planning involves the distribution of your financial assets to your heirs upon your death, and many people assume that the way this is done is through a will. Though it is true that wills are often used to define the terms of asset distribution, there are other vehicles for transferring assets that have a lot of appeal to many people. One of them is the revocable living trust.
When you are planning your estate you invariably want to make things simple for your loved ones after you pass on. When you have a will the estate must go through probate, where its validity will be determined. The probate or surrogate court then supervises the administration of the estate, and this ensures the transparency of all transactions made in behalf of the estate, so probate does provide useful protections. On the other hand, the estate administration process (not probate)can be a time consuming process that can get costly by the time legal fees, and other attenuate expenses are paid if your estate is not properly set up.
Revocable living trusts are an alternative in the right circumstances. After you fund the trust you as the grantor select a trustee or trustees and you name your beneficiaries. You can act as trustee while you are living, so you retain control of the assets in the trust. You name a successor trustee who will administer the trust according to your wishes after you pass on. This can be a single individual, multiple people, or an entity such as a bank or a trust company. Upon your death the assets are then transferred to your beneficiaries and are usually not subject to probate if properly funded. Since the trust is indeed revocable, you can change it as you see fit or dissolve it altogether at any time.
Revocable living trusts are a good option in the right circumstances due to the efficiency and flexibility that they provide if set up correctly. Whether or not a living trust is the right choice for you would depend on the details of your wishes and the size and scope of your estate.
Alan Augulis, Estate Planning Attorney
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