Thinking About A Revocable Living Trust?Jamie Kahn
September 25, 2008 — 1,444 views
Common reasons for creating a revocable living trust include avoiding probate, reducing estate taxes (both of which can mean losing thousands of dollars), appointing guardians for minors, establishing greater control over distributions to young beneficiaries, lessening the likelihood of a successful contesting of your will, and easing the process for appointed persons to manage your assets during an incapacitation.
You must determine if the benefits of a revocable living trust outweigh the costs of having one prepared. Your costs can be hefty if several considerations aren't examined.
First, check with local attorneys and estate planners to determine what average estate value leads to probate in your state. Probate often averages between 3%-10% in attorney and court costs (it is not a tax). Will the price of a trust be more or less than your potential probate fees? Many estate-planning firms can provide affordable attorney-prepared documents for less than $1,000 -a cost much lower than most probate fees.
Second, who will prepare your trust? Sources include self-made trust kits available over the Internet, legal document preparers, paralegals, and attorneys. Should your document not be prepared properly, it can be contested successfully. An experienced planner will ask enough questions to ensure that you've minimized estate taxes and set clauses in place, such as distributions to special needs beneficiaries, care for pets and qualifications for beneficiaries.
Third, and most important, know what must be done after you have signed your trust. Many trusts include one page that assigns all property without a title (e.g., silverware, jewelry, and art) to your trust. This page does not cover assets that have a title, such as houses, vehicles, and bank accounts. These assets must be re-titled in to the name of your trust. Often, people forget and/or procrastinate this important step regarding transferring (funding) their most valuable assets, which then remain subject to probate.
When you interview potential estate planners, listen closely to their descriptions of the estate planning process and choose a planner who stresses the importance of transferring your assets to the trust. While funding your trust does take time and legwork, it often is as simple as allowing the bank, DMV, or broker to copy trust documents and sign a few forms. If you have property a new deed for each must be prepared. A good estate planning firm should be able to provide new deeds for your existing properties at the time of your trust signing.
Regardless of the resource(s) you choose to set up your plan, a revocable living trust can protect your assets and achieve your objectives by making sure that every step is carried out in full. Making these arrangements could be the most important decision you make regarding management of your estate to ensure you and your family's well-being when you're no longer able to direct that financial course.
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