Law FAQ: Questions About Revocable Living Trusts
What is a revocable living trust? A revocable living trust is a legal document that, just like a will, contains your instructions for what you want to happen to your assets when you die. But, unlike a will, a living trust can avoid probate at death, control all of your assets and prevent the court from controlling your assets if you become incapacitated.
How does a revocable living trust avoid probate and prevent court control of assets at incapacity? When you create a revocable living trust, you transfer assets from your name to the name of your trust, which you control. Legally, you no longer own anything; everything now belongs to your trust. So there is nothing for the courts to control when you die or become incapacitated. The concept is simple, but this is what keeps you and your family out of the courts.
Do I lose control of the assets in my revocable living trust? Absolutely not. You keep full control. As trustee of your trust, you can do anything you could do before – buy and sell assets, change or even cancel (or revoke) your trust. That’s why it’s called a revocable living trust. You even file the same tax returns. Nothing changes but the names on the titles.
Is it hard to transfer assets into my trust? No. Your attorney, financial advisor, insurance agent and other professionals can help. Typically, you will change titles on real estate, stocks, bonds, CDs, bank accounts, investments, insurance and other assets with titles. Revocable living trusts also own tangible personal property and other assets that do not have titles. Some beneficiary designations should also be changed to your trust so the court can’t control them if a beneficiary is incapacitated or no longer living when you die.
Doesn’t this take a lot of time? It will take some time – but you can do it now, or you can pay the courts and attorneys to do it for you later. One of the benefits of a revocable living trust is that all of your assets are brought together under one plan. Don’t delay “funding” your trust; it can only protect assets that have been transferred into it.
Feel free to contact us for more information about how a revcoable living trust would work in your estate plan.