There are key advantages to the Revocable Living Trust and some disadvantages that you need to know.
The advantages include avoiding probate and maximizing tax savings with proper planning. A revocable living trust also allow you to maintain control of your assets during life.
The revocable living trust will cost you more than the last will and testament because it is a more detailed document that typically requires the assistance from an attorney. In the long run, the document could save your estate a tremendous amount of money at the close.
A common misconception is that you will lose control of your assets during your lifetime with the revocable living trust. You don’t. But you do have to name yourself as the trustee. However, if you are thinking of using the revocable living trust for the purpose of qualifying for Medicaid, “forget it!”
Another misconception is that the revocable living trust is only for the very wealthy. Rather, they can be used by anybody wishing to ensure that their wishes are carried out. Let’s use an example. It is important to me that my daughters go to college. If I happen to pass on before their college days begin, I can use the revocable living trust to ensure they are aware of my wishes. I can begin taking distributions from my trust to each daughter at any age I want, say 22, if they graduate college. If they do not graduate college, the distributions will be postponed to age 30.
We all want to pay less tax. There are many different types of trusts to maximize tax savings, depending on the net worth of each estate. This is a very complex topic. There are other strategies to transfer property depending upon the content and the location of the estate.
The estate planning process will recognize the needs, and the strategy will dictate the tools used. When meeting with an attorney, you need to make sure that you bring up the use of a revocable living trust if he or she doesn’t.
In some cases, an attorney may push a will because he or she will make more money by probating your estate. Attorneys usually charge a flat fee of $1000 to $2,000 for the revocable living trust. Probate fees are typically much more than this.
