What are the benefits of setting up a revocable living trust as part of my estate plan?

As a lawyer, I am happy to provide advice on the benefits of setting up a revocable living trust as part of an estate plan.

Firstly, a revocable living trust can help avoid probate, which is the legal process of administering a deceased person’s estate, which can be time-consuming and costly. By placing assets in a trust, they can be distributed to beneficiaries without having to go through probate. Furthermore, assets in a trust can often be distributed more quickly than if they were subject to probate, allowing beneficiaries to receive their inheritance sooner.

Secondly, a revocable living trust can help maintain privacy. Probate proceedings are generally public, which means that information about the deceased person’s assets, debts, and distributions become part of the public record. By creating a trust, the trustee can distribute assets to beneficiaries privately, reducing the amount of information that becomes publicly available.

Thirdly, a revocable living trust can provide continuity in the management of assets. If the trustee becomes incapacitated, the designated successor trustee can step in and manage the assets, without having to go through the court process of appointing a conservator or guardian. This can help avoid potential family disputes over who should manage the assets and provide for the trustee’s needs.

Last but not least, a revocable living trust can provide tax benefits. While the assets in a revocable living trust are still subject to estate taxes, they are not subject to probate fees, which can vary by jurisdiction and can be high. Furthermore, if the trustee is an individual, they can make use of the annual gift-tax exclusion to pass assets to beneficiaries without incurring gift-tax liability.

It is important to note that creating a revocable living trust can involve legal fees and the trust must be properly funded for it to be effective in avoiding probate. Additionally, while a trust can help avoid probate, it does not necessarily protect assets from creditors or lawsuits. Furthermore, a revocable living trust is not appropriate for everyone and other estate planning tools, such as a will, may be more appropriate for some individuals.

Overall, creating a revocable living trust can have several benefits in estate planning, including avoiding probate, maintaining privacy, providing continuity in asset management, and providing tax benefits. It is important to consult with a licensed attorney to determine whether a revocable living trust is appropriate for your specific circumstances and to ensure that the trust is properly created and maintained.