What Is a Revocable Trust and Do I Need One?

You may have heard about trusts in relation to estate planning and wondered whether that is something you should consider. While estate planning may not be the most exciting topic for most people, it’s certainly an important one. As you plan for your financial future and secure your legacy, creating a revocable trust is a great option because of the benefits it offers.

What is a Revocable Trust?

A revocable trust is also commonly referred to as a revocable living trust. This is a written document that outlines how your assets will be handled after you die. Assets included in the trust can include things like bank accounts, investments, real estate, and personal possessions.

The person who makes the trust is known as the grantor or trust-maker. Because it is a living trust, the person who handles the administration of the trust, or the trustee, is usually the same person. However, a successor trustee will take over this role after the grantor dies. Finally, the beneficiaries are the people or entities that will receive assets from the trust after the grantor passes away.

Benefits of Creating a Revocable Trust

Here are some of the top benefits of having a revocable living trust as part of your estate plan:

1. It is Flexible and Changeable.

You can make flexible stipulations in a trust, such as having payouts to beneficiaries tied to age or events (college graduation or marriage). You can also cancel or change the trust at any time as long as you still have capacity.

2. It Covers Your Assets During Different Life Phases.

This type of trust covers you during three phases of your life — when you are still living and have capacity, if you become incapacitated, and after your death.

3. It Avoids Probate.

With a revocable living trust, your estate can avoid probate after your death. Anything held in the trust can pass directly to your named beneficiaries.

4. It Protects Your Privacy.

A will becomes part of the public record after your death, meaning anyone can see what you left to others. But a trust will always remain private.

5. It Offers Time and Cost Savings.

By having the trust in place, you can save your loved one’s time, cost, and stress in the future because your wishes have already been made crystal clear.

6. It Provides Greater FDIC Protection.

When assets are placed in a trust, the owner receives the regular $250,000 of FDIC insurance protection, but so does every beneficiary listed in the trust.

Are There Any Downsides to Creating a Revocable Trust?

The only downside to creating a revocable living trust is that you need to put some work in on the front end. Specifically, you’ll have to retitle the assets you want to be held by the trust. Otherwise, they’ll likely end up in probate. This involves contacting your bank or other entities to have them change the ownership of assets to the name of the trust.

Do You Need a Revocable Trust?

A revocable trust can duplicate some of the things you can accomplish with a will, but not all of them. In fact, many people have both a will and a trust to ensure they cover all the bases. While you don’t necessarily need a revocable trust, the many benefits this estate planning tool provides make it something worth considering.

Louisville Estate Planning Attorney is dedicated to providing people who are interested in securing their financial future with the information they need to make sound decisions. We can connect you with a Kentucky estate planning attorney that will offer knowledgeable guidance on wills, trusts, and other estate planning strategies.