A revocable trust, often known as a living trust, is a legal document created by individuals to hold and manage their assets during their lifetime and/or after death. This type of can be altered or revoked by the grantor at any point during their lifetime as long as they are mentally competent.
Assets in a revocable trust can be transferred to beneficiaries without probate. This potentially saves time and reduces the costs associated with estate settlement.
The role of revocable trusts in estate planning
Revocable trusts play a significant role in comprehensive estate planning. The terms of a revocable trust and the details of asset distribution remain private since it doesn’t go through probate. When assets are passed down through a will, the terms are public.
These trusts can provide a way to manage the grantor’s assets if they become incapacitated. Since the grantor names a successor trustee, this individual or entity can take over the management of the trust’s assets. As long as a responsible successor trustee is named, this preserves the assets for future generations.
A grantor can structure the trust to address specific goals or concerns, such as providing for a minor child or managing assets for a beneficiary who may not be financially savvy.
Individuals who are considering a revocable trust should seek legal guidance to better ensure that a trust is correctly set up. This is only one part of a comprehensive estate plan, and it’s critical to ensure every estate planning strategy works together to meet the goals of the creator. Being as proactive as possible is ideal, as no one knows for sure how much time they’ll have before their estate plan will become truly pressing business for their loved ones.