Revocable trusts, which are also known as living trusts, are a cornerstone of comprehensive estate planning. They offer individuals a flexible and efficient way to manage their assets during their lifetime and after their passing.
These trusts are classified as revocable because the person who creates the trust, referred to as the grantor, can alter or dissolve the trust at any point during their lifetime as long as they remain mentally competent. This flexibility allows for adjustments to the trust based on changing circumstances, financial situations or family dynamics.
Benefits of a revocable trust
One of the primary benefits of a revocable trust is privacy. Unlike wills, which become public records through probate, revocable trusts maintain confidentiality by allowing assets to be distributed privately among beneficiaries.
Additionally, revocable trusts offer protection in the event of the grantor’s incapacity. Should the grantor become unable to manage their affairs, the successor trustee can step in to manage the trust assets, ensuring that the grantor’s financial needs continue to be met without needing a court-appointed guardian or conservator.
Considerations and limitations
While revocable trusts offer numerous benefits, they aren’t a one-size-fits-all solution. For example, assets must be appropriately titled in the name of the trust to be governed by its terms, a process that requires diligence and ongoing management. Revocable trusts don’t offer protection against creditors during the grantor’s lifetime, as the assets within the trust are still considered part of the grantor’s estate for creditor and legal purposes.
Because of the complexities of trusts, it’s best to work with a professional who can better ensure the entire estate plan meets the wishes of the person creating it. This a task usually best done as soon as possible to better ensure that everything is in order in the event that life takes unexpected turns for the worse.
