Published on August 17th, 2020 | by Bibhuranjan0
Top 3 benefits of a revocable living trust
With a will being one method of passing estate to beneficiaries, another avenue that is often pursued is a revocable trust. So depending on one’s circumstances, it’s the revocable trust that wins many people over. So, with this being said, here’s a look at the pros of revocable trusts.
Revocable Trusts: How They Work
A revocable trust is made when the individual (known as the grantor) signs a trust that names a corporation, a person/persons, or both as the trustee in order to administer the trust. In several different jurisdictions, the trustee and the grantor are capable of being the same person.
However, it’s important that a co-trustee is named so that the continuity of management can be continued in the event of disability or death. Oftentimes a bank or a trust company is named as the trustee (rather than a single person) since it ensures that the trustee will be able to make decisions in the best interest main trustee.
A revocable trust oftentimes allow that property can be managed for the benefit of the grantor. In several cases, the grantor will retain certain rights (regarding the trust) during the individual’s lifetime. Such rights include the right to revoke or change the trust at any moment and the right to distribute some or all of the trust property. A trustee’s powers include rights to create discretionary distributions regarding the income. In the event the grantor is unable to manage the affairs, the task can be handed down to the grantor’s family or someone granted as principal to the grantor. If the grantor happens to pass away, the trust will then act as a will, which will then distribute property (to the beneficiaries) as mentioned in the trust agreement.
Although it is possible that the trust can be funded to the death of the grantor, most prefer to fund it as the grantor is alive. The reason for this is due to the fact that the continuity of the management of assets and support of the grantor (financially) can continue in the event they become disabled.
Real property, other assets that have been put in the name of the trust, and registering securities are what can fund the trust throughout the grantor’s lifetime. As far as the registration of property, it is not required in trusts that were funded at passing in the event where the probate estate simply “pours over” into the trust. However, it should be mentioned that trust funded at passing with not avoid how important the probate is in regards to the trust.
Revocable Trusts: Advantages
There’s several perks that come with revocable trusts. Such perks are:
– They’re the best way to ensure that the property in question remains available so that it can be utilized for one’s benefit in the event the owner becomes mentally or physically incapable of managing affairs.
– They’re flexible. Revocable trusts allow one to name out-of-state trust companies, out-of-state individuals who are unrelated act as a primary administrator in the event of one’s passing. If no trust is involved, there’s quite a few jurisdictions that limit such flexibility in such a scenario. In addition to this, it is easier to create amendments to a trust (in comparison to a will).
– Probate avoidance. Probate is known as the legal process in which determine that a will is valid. Since probate can be time consuming and costly, the avoidance of this process is one of the larger perks that comes with revocable trusts. The perks of this benefit can reach far and wide. However, every jurisdiction has a different probate process, so it’s important to discuss with counsel to see if these advantages will apply to you.
– Asset availability at death. The assets that are in a revocable trust are available for use to raise cash for debts, administration expenses, and estate taxes immediately in passing, which does not include a probate process. If the trust had been funded before death, the property that was in the trust will remain in name of the trustee after and before death, which will make it available to liquidate immediately if the event arises.
– Destroyed or lost originals. If one is offering a will for the probate process, the original wills need to be provided so that it will not be assumed that the will was revoked. In many scenarios, only a single original copy must be presented at death. With revocable trusts are not subject to probate, several originals can exist, and it simplifies the passing of estate process.
Investment management with no interruption. One of the more significant perks that come with revocable trusts is that they allow one uninterrupted investment management in the event the grantor dies or becomes disabled. So assuming that the assets in question has been transferred into the trust’s name, there will be no need to reregister the securities once the individual passes. In addition to this, it’s possible that no new investment strategy will be needed to create (depending on the investment objectives and cash needs of the grantor).
Considering the information above, there’s a lot to learn when it comes to revocable trusts. Death, passing, or disability can be overwhelming for one – especially when finances are involved – and setting up a revocable trust might be exactly what one needs to make things less complicated in the event they’re not around anymore. Thankfully, we’re here to help you through this process to keep things less complicated in the future. Contact us today for further information!
Cover Image : Needpix