Revocable Living Trusts
The Revocable Living Trust is an increasingly popular estate planning instrument used as a method for passing an individual’s real and personal property on to individuals or other entities upon death without the delay and expense of the probate process. But its desirability will depend upon your goals and personal preferences. Some individuals prefer to avoid probate court whenever possible for privacy, expense and convenience purposes and the revocable living trust can be used to accomplish these goals. A revocable living trust also can be very useful in a situation where the client ultimately becomes mentally incapacitated after the establishment of the trust. In this case, the successor trustee can assume management and control of the assets seamlessly without the expense of a time consuming conservatorship proceeding and its invasion of your privacy. As is the case with a will, a revocable living trust can be revoked or amended by a competent person any time until the date of death and the client retains full rights to manage all of the assets transferred to the trust. With a revocable living trust, a trust agreement is established during the client’s life, a trustee appointed (often the client himself, at first) and assets are transferred to the trustee. The trust agreement contains language which governs the management and use of the assets of the trust during and after the life of the client and allows beneficiaries who take control of the assets immediately upon the death of the client quickly and seamlessly. The revocable living trust can also continue years beyond the death of the client with a successor trustee continuing to manage the assets for the benefit of the beneficiaries. This is often the case where the beneficiaries are minor children or below the age where the client wishes them to have direct control of the assets. Some clients prefer to keep some or all of their assets outside of the trust during their life for ease of administration, instead using a "pour-over" will to transfer assets to the trust upon death. While this method does not avoid probate of the estate, it does limit the involvement of the Probate Court in the administration of the trust after the death of the client. It is important to note that the use of a living trust can avoid a legal challenge to your estate plan after your death since it is typically more difficult to challenge a living trust than it is to challenge a will. Despite all of the advantages of a living trust, it is important to know that a revocable living trust does not protect your assets from litigants or other creditors. Further, these trusts are not useful if the client is attempting to qualify for medicaid coverage because and the assets in the revocable living trust are still counted assets for medicaid purposes. Finally, while there is no income tax advantage or disadvantage with a revocable living trust, these trusts can be drafted to afford the same estate tax advantages that a will can offer.
The revocable living trust agreement is normally more complex than a will and additional lawyer time must be spent on the transfer of the assets to the trustee. Consequently, the legal fee for a revocable living trust is usually higher than the legal fee for a will. It is important to use an experienced estate planning lawyer to prepare and implement your revocable trust. Attorney Rubino has 36 years of estate planning experience and can guide you in deciding if a revocable trust is right for you and in implementing that trust.