A revocable living trust is a great way to avoid the time-consuming and expensive process of probate. It also keeps your estate and asset information private after your death. This type of trust can be used to save on future probate costs, designate guardianship for minor children, and reduce or eliminate potential estate tax liability. However, it is important to note that a revocable living trust is not protected from creditors in the event of death.
The main advantage of a revocable living trust is that it can help you avoid probate. This legal process can be lengthy and costly, but with a trust, the assets can be distributed to its beneficiaries without the need for probate. Additionally, revocable trusts are a good option for those who want to keep their records and asset information private after their death. The succession process to which wills are subject can turn your estate into an open book, since the documents entered in it become public records, which can be accessed by anyone.
A living trust or a revocable living trust can help your estate and heirs avoid the complications and costs of probate. However, a trust cannot designate guardianship for minor children, which is why wills and living trusts are often used together as part of an estate plan. A revocable living trust can also help you save on future probate costs. Although setting up a trust is more complex and expensive than setting up a will, it can be worth it if it reduces the hassle of dealing with an estate.
An active trust is not effective unless the person creating it invests their money or assets in it. And if you own property in another state (for example, a vacation home), if you transfer title to a living trust, you can avoid having to go through probate proceedings in more than one state. Additionally, if you want to change beneficiaries after you have established a revocable living trust, you can do so. For married couples with larger estates, revocable active trusts have the added advantage of allowing planning for a reduction or elimination of the potential estate tax liability by maximizing tax breaks for both spouses (i.e., if you establish an active trust and transfer assets to the trust, probate courts may not oversee the distribution of those assets when you die). For married couples, a revocable living trust can be designed so that, upon the death of the first spouse, the assets are protected in the event that the surviving spouse remarries.
This type of will ensures that any assets that are not already in your trust are automatically transferred to your living trust after your death. The assets of a revocable active trust are not protected by current or future creditors in the event of death (but the assets of a living irrevocable trust may be protected by creditors). With a revocable living trust, you do most of the work in advance, making the disposal of your estate easier and faster. Therefore, the grantor must declare the trust's income on their personal income tax return instead of filing a separate tax return for the trust. Because of their private nature and the law, living trusts are less likely to be challenged in court than a will.