What Is A Revocable Living Trust?
- The Settlor: the person who creates the trust
- The Trustee: the person who manages the trust
- The Beneficiary: the person who benefits from the trust
If you are married, you and your spouse will play all three parts, meaning you'll create the trust as Settlor, manage the trust as Trustee, and benefit from the property held in trust as the Beneficiaries. You will have full use and enjoyment of the assets transferred into your trust during your lifetime. Further, in the event that you become incapacitated, or upon your death, you will be able to chose "Successor Trustees" to take over your role in managing the trust.
A Revocable Living Trust is a lot like creating a business for your property. As part of the process, you will retitle your assets to be housed in the trust. This comes with many benefits. The primary benefits of having a Revocable Living Trust are:
- Avoids Probate proceedings (upon death)
- Avoids Guardianship proceedings (upon incapacity)
- Maintains privacy
- Provides a Unified Receptacle for assets
- Creditor protection for beneficiaries other than you (i.e., your children)
- Reduces taxes at death
Who Should Have a Revocable Living Trust?
Contrary to popular belief, estate planning is not reserved for the wealthy few. Whether you are a newly-married couple with a newborn on the way, or retired with a modest estate, if you own assets like a house and want your loved ones to avoid court interference at your death or incapacity, you should consider a Revocable Living Trust created with your input by a reputable and experienced trust attorney.
Trusts allow you to bring all of your assets together under one plan without court interference. This is especially important for individuals who own property in multiple states. For example, if you own a house in Missouri and a lake house in Kentucky, you can retitle all of those assets into the name of the trust. If you die owning those properties in your individual name, not only will your property be subject to probate proceedings in Missouri, but also in Kentucky and whichever other state you have property in. This means more costs for you and your family upon your death.
What Does It Mean to "Fund" A Revocable Living Trust?
Technically speaking, only assets retitled in the name of your Trust and assets payable to your Trustee (or some other beneficiary) upon your death avoid probate. It is important to note that just because you sign the trust documents, a trust does not exist until it has actual property owned by the Trustee. Therefore, for a Revocable Living Trust to work properly, you cannot just simply sign the trust document.
After the trust document is signed, you will need to "fund" your assets into the trust. To fund your trust, you must transfer all of your individually-held assets to your trust and amend beneficiary designations so that those assets are payable to the Trustee upon your death. Usually, people will transfer their bank accounts into the trust or make the trust beneficiary to any life insurance policies or their house.
Luckily, with help from The Taormina Firm, you will have the knowledge and know-how necessary to transfer your assets into your Revocable Living Trust. For starters, The Taormina Firm will record a Beneficiary Deed for any property that you own. This means that when you die, the Trustee of your trust becomes the beneficiary of your house and other properties. This provides a lot of flexibility to you and your family. You may also wish for The Taormina Firm to place your house in trust using a Quitclaim Deed instead. This means that the trust will be the owner of the house instead of you.
The Taormina Firm will also provide you with a set of instructions for transferring assets into your Revocable Living Trust. This process is relatively easy and incredibly important. All you will have to do is contact your financial institutions and ensure that your assets are titled properly within the trust. If you fail to do that, then it becomes a lot harder to administer your Revocable Living Trust after death.
The Taormina Firm is an experienced Revocable Living Trust law firm serving clients across the St. Louis area. We want to work with you to optimize your estate plan and ensure that you can avoid the pain of probate after your death. We are happy to answer any questions or concerns that you might have. And, if you feel so inclined, you can schedule an appointment with us today!