Revocable Trusts: The Ultimate Estate Planning Solution for Control and Flexibility
A revocable trust is a powerful tool in estate planning that provides flexibility and control to its grantor during their lifetime and distributes assets to designated beneficiaries upon their passing. This estate planning tool is increasingly popular for those looking for effective ways to manage their assets and ensure their wishes are honored after they are gone.
What is a revocable trust?
A revocable trust is a legal arrangement that allows the grantor to transfer assets into the trust and retain control over the trust assets during their lifetime. The grantor retains the right to make changes to the trust, add or remove assets, and alter the terms of the trust as needed. Upon the grantor’s passing, the trust assets are distributed to the designated beneficiaries according to the terms of the trust.
Benefits of a Revocable Trust
Avoidance of Probate: A revocable trust allows for the transfer of assets outside of the probate process, which can be time-consuming and expensive. With a revocable trust, you can avoid probate and ensure a smooth transfer of assets to your beneficiaries.
Control and Flexibility: As the grantor of a revocable trust, you have the ability to make changes to the trust during your lifetime and retain control over the assets in the trust. With a revocable trust, you can maintain control over your assets and make changes as needed.
Privacy: The terms of a revocable trust and the distribution of assets are private and not made public through the probate process. With a revocable trust, you can maintain the privacy of your assets and ensure your wishes are carried out according to your instructions.
Efficient Asset Distribution: Upon your passing, the assets in a revocable trust can be distributed to beneficiaries quickly and efficiently without the need for court intervention. With a revocable trust, you can ensure that your assets are distributed to your beneficiaries as soon as possible after your passing.
Protection of Assets: A revocable trust can be used to protect assets from creditors, lawsuits, and other legal claims. With a revocable trust, you can ensure that your assets are protected from legal challenges and remain in the hands of your intended beneficiaries.
How Does a Revocable Trust Work
Here’s a step-by-step guide to the process of setting up a revocable trust.
Contact Estate Planning Attorney Chad Turnbow. The first step in setting up a revocable trust is to set up a meeting with our estate planning attorney to discuss your goals and objectives.
Draft a Trust Agreement Working with our attorney, you’ll draft a trust agreement that outlines the terms and conditions of the trust, including your instructions for managing the assets, the appointment of a trustee, and the identity of the beneficiaries.
Transfer Assets into the Trust Next, you’ll transfer your assets into the trust by executing by retitling the assets in the name of the trust.
Serve as the Initial Trustee Typically as the grantor of the revocable trust, you’ll serve as the initial trustee and retain control over the trust assets during your lifetime, making changes to the trust as desired.
The Trustee Manages the Assets The trustee is responsible for managing the trust assets in accordance with your instructions and investing the assets as directed.
Successor Trustee Takes Over Upon your death, the successor trustee will take over the management of the trust assets and begin the process of transferring the assets to the beneficiaries as outlined in the trust agreement.
Beneficiaries Receive the Benefits The beneficiaries will receive the benefits of the trust assets as directed by your instructions in the trust agreement.
In conclusion, setting up a revocable trust is a straightforward process that can offer numerous benefits for your estate planning. If you have any questions about revocable trusts or other estate planning tools, be sure to consult with an experienced estate planning attorney.”
Will vs Revocable Trust
A will and a trust are both estate planning tools, but they serve different purposes and have distinct key differences. Some of the key differences between a will and a trust include:
Purpose: A will is primarily used to distribute a person’s assets after their death, while a trust is used to manage and protect assets during a person’s lifetime and after their death.
Probate: A will must go through probate, which is a court-supervised process of distributing a person’s assets after their death. A trust, on the other hand, avoids probate as the assets are transferred directly to the beneficiaries upon the grantor’s death.
Control: A will only takes effect after a person’s death and does not provide for asset management during their lifetime. A trust, on the other hand, allows the grantor to retain control over their assets and manage them during their lifetime, and transfers the assets to the beneficiaries upon their death.
Privacy: The probate process for a will is a matter of public record, while the terms of a trust are private and not subject to public scrutiny.
Frequently Asked Questions About Revocable Trusts
There are several reasons why you may want to set up a revocable trust, including avoiding probate, reducing estate taxes, protecting your privacy, and ensuring that your assets are distributed according to your wishes.
Yes, as the grantor of the trust, you have the power to modify the terms of your revocable trust at any time during your lifetime. This makes a revocable trust a flexible estate planning tool.
When you set up a revocable trust, you will typically appoint a trusted individual or institution as the trustee. The trustee will be responsible for managing and distributing the assets in the trust according to the terms you have specified.
No, setting up a revocable trust will not protect your assets from creditors. However, when you pass away and the trust becomes irrevocable, the assets in the trust may be protected from creditors, depending on the terms of the trust and applicable state laws.
During your lifetime, any income generated by the assets in your revocable trust will typically be taxed as if the assets were still in your name. Upon your death, the assets in the trust may be subject to estate taxes, depending on the value of your estate and applicable federal and state laws (Tennessee currently has no estate tax).