ADVANTAGES OF A REVOCABLE TRUST
What are the Advantages of a Revocable Trust? Is a "Lifetime” or Revocable Trust for You?
In certain, but not all, situations, it may make sense to create and fund a "lifetime" or revocable trust. There are certainly advantages of a revocable trust. Below are a few factors you should consider in determining whether such a trust makes sense for you.
ADVANTAGES OF A REVOCABLE TRUST – AVOID COURT MEDDLING:
One of the primary advantages of a revocable trust is the Courts are typically not involved with lifetime trusts. Many people desire to avoid court intervention in the distribution and division of their assets. Establishing a "lifetime" (or revocable) trust may eliminate the need for court intervention.
Note that certain counties may require you to disclose the existence of a revocable trust in the event that you ultimately file for probate. Although you may have to disclose the trust, you will not need to obtain "Letters of Trusteeship" for the trust. The elimination of the need to obtain separate "Letters of Trusteeship" eliminates Court oversight and reduces administrative burdens.
Ease of Administration: Having a "lifetime" trust allows you to place assets, regardless of size and location into the trust, thereby creating one general operating base. One of the primary advantages to a revocable trust is that you will not need to go to each state and obtain authority to act as a fiduciary in that state.
Direct Distribution of your Assets: When you place beneficiary designations on assets or create joint accounts, you are directing that the entire asset pass, all at once, to the person you have designated. Under such an approach, you are not able to control or temper distributions. However, if you create a trust, you can direct that a portion of the funds be held back, delayed, or placed in another trust upon the occurrence of a certain event.
Create Flexibility for Future Planning: Another advantage to a revocable trust is the ability to plan for disability or incapacity.
First, by creating a trust, you may be able to provide a smooth succession plan for asset management by specifying in your trust who you would prefer to manage your finances in the event of your disability.
Second, if you become disabled, all of your assets are already in one location, and you can take steps to prepare for long-term care planning (e.g. make the trust irrevocable and commence Medicaid planning).
Advantages of a Revocable Trust – Privacy: Yet another advantage of a revocable trust is the limited number of people who, in the absence of litigation, can access the document.
Remember that if you establish a trust, only assets placed in the trust will be subject to the trust's rules. If you do decide to create a "lifetime" (or revocable) trust, remember to consult with your attorney about which assets should be transferred to the trust immediately in order to maximize the trust's effectiveness.
This document is designed for general information only. The information presented in this document should not be construed to be formal legal or tax advice nor the formation of a lawyer/client relationship.
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