Why a Revocable Living Trust is Crucial to Safeguard your Legacy
Estate planning is crucial for securing your assets and ensuring your loved ones are protected when you are no longer around. Although there are many ways to set up your estate plan, a revocable living trust is the best and most cost-effective option for most individuals and families. In this article, you will learn what a revocable living trust is, the benefits it offers, and why it is essential in your estate plan.
A revocable living trust is a legal document that allows a person to place their assets, such as real and personal property, business interests, and bank accounts, into a legally recognized entity (similar to a business). With a revocable living trust, you can still personally maintain control over, and make changes to, your assets while you are alive, while also providing the many benefits discussed below.
- Avoiding Probate
The most significant advantage of a revocable living trust is that it allows your loved ones to avoid the often time-consuming and expensive probate process after you pass away. To explain, probate is a legal process where a court oversees the distribution of a deceased person’s assets, as provided for in their will or by a state’s laws if there is no will.
Since probate can be a lengthy process, there are often delays in transferring assets to beneficiaries. Moreover, the probate process can result in substantial court fees and attorney expenses, which ultimately reduce an estate’s value. With a revocable living trust, your loved ones can directly receive your assets without undergoing such an outdated and inefficient process.
- Maintaining Privacy
Unlike a will, which becomes public record when it goes through probate, a revocable living trust keeps the distribution process private as it avoids the probate process, thereby ensuring that sensitive information remains confidential.
- Incapacity Planning
Another great benefit a revocable living trust offers is that it includes a plan of what to do in the event that you become incapacitated and unable to make decisions. In the unfortunate event that you become unable to manage your affairs, the trust will continue to function seamlessly based on, and in accordance with, decisions you made when of sound mind.
- Flexibility and Control
A revocable living trust also provides the most flexibility and control over your assets. While alive (and mentally competent), you retain complete authority to manage, modify, or revoke the trust as you see fit. You can also add or remove assets from the trust whenever you want and set specific conditions for distributing assets to beneficiaries (such as ensuring that a young child does not get a full inheritance all at once and at an early age or requiring that they reach a stated milestone like graduating college).
Conclusion
Setting up a revocable living trust is a wise decision for most individuals who wish to protect their assets and streamline the process of distributing those assets to their loved ones. The notion that a trust is for rich people is a common misconception caused by them having greater access to information on how to secure and protect their wealth. This is an estate planning tool that most people, even lower middle-class individuals and families, should utilize.
You should consult with a qualified estate planning attorney to learn more and get your estate planning affairs in order.
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