The revocable living trust is an incredibly powerful estate planning tool. It can provide numerous benefits to you or your beneficiaries, but only if done correctly. And, despite your best efforts, you can still wind up in probate or worse; even with a revocable living trust!
That’s why it’s important to get the facts you need, before you start! This 17-page guide provides you with answers to many questions. It also shows you to avoid the most common mistakes!
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Probate is the legal process in which a court oversees the administration of the estate of a decedent. Generally, a will must go through probate administration before its directives can be carried out. Once the will is proven, the court sees that the decedent’s debts are paid and their assets are distributed according to their will.
While having a will is certainly better than the alternative, because it does establish intent, having a will does not “protect” you or your family from probate in any way. In fact, all wills are subject to probate, regardless of their size.
A Living Trust is similar to a will in the sense that it is created for the purpose of transferring assets to your beneficiaries at death. However, in contrast to a will, a living trust completely avoids probate, if properly drafted and funded. A living trust can also manage property, either for you, in the case of incapacity, or for the benefit of a minor or other loved one with special needs.
A Living Trust is a legal agreement created to hold title or ownership to your property. Under your direction, property is transferred from you as the titled owner, to you as the trusteed owner under the trust. As Trustee of your Living Trust, you retain total control of the trust assets during your lifetime. Even upon death or incapacity, indirectly, you still retain control because you named the person to receive control under either circumstance.
Not everyone does. Some people have simple estates that may go through probate smoothly. Others just don’t care. Often, though, probate has numerous potential disadvantages that a lot of people prefer to avoid. These disadvantages include cost, delay, publicity, control and hassle.
The living trust may include provisions which serve to reduce or eliminate federal estate taxes for married couples. This is done by ensuring that both available marital tax credits are utilized. This means that, married couples may pass up to $10.9 million (2016) free of the federal estate tax.
Generally, a living trust is more expensive than a will. However, because a living trust avoids probate, there are few costs associated with settling the trust. This allows for the costs to be known up front. While a will may be less expensive initially, the estate will incur probate costs, such as attorney fees and other expenses, which should also be considered.