If you’ve heard that a trust might be the perfect solution to many of your estate planning needs, you’re not alone. Millions of Americans are learning about the benefits trusts can have in their own comprehensive planning efforts. Still, you might be a little bit reluctant to give up ownership and control over your assets by placing them in a trust. Chances are that you’d like to continue to exercise that control for as long as you can, right? Well, revocable trusts could be the perfect solution for your needs!
What are Revocable Trusts?
You may have heard more about revocable trusts than you realize. These legal entities are often referred to as “living trusts” and differ dramatically from the irrevocable trusts you often see talked about when people are discussing tax shelters and Medicaid planning options. An irrevocable trust is one in which your assets are owned by the trust and managed by another person (called the “trustee”) for the benefit of your named beneficiaries. Those trusts are effectively permanent, since they are extraordinarily difficult to revoke or alter.
A revocable trust, or living trust, is a different creature altogether. Unlike irrevocable trusts, you can revoke or modify your living trust at any point during your life. In almost every other respect, however, the structure is the same: your assets are owned by the trust and managed by the trustee to benefit others. However, despite the similarity in structure, there is one fundamental difference that can make the living trust an attractive option for those who don’t want to give up complete control over their assets: you name yourself as the trustee.
By naming yourself as the trustee, you can maintain control over your own assets. While they are technically owned by the trust, they can be managed in a way that ensures that you continue to enjoy the benefits of those assets for as long as you are alive. Of course, you also need to name a successor trustee to take control in the event that you die or become incapacitated, and beneficiaries who will receive the benefit of those assets when you are gone. For the rest of your life, however, your trust will exist to serve and benefit you.
That means that you can arrange your trust to ensure that you receive the benefit of any income it generates during your life, and can move assets into and out of the trust as circumstances might dictate. That can provide you with the control you need to ensure that your trust and its assets are always yielding maximum benefits for you and your loved ones.
What Should Go into Your Revocable Trust?
Of course, you shouldn’t just throw everything you own into your trust. There are benefits and drawbacks to doing so. For example, if you have bank accounts that are designated as pay-on-death, or life insurance and retirement accounts with named beneficiaries, then those assets won’t need to be in the trust’s name. If the beneficiary is a minor child, however, you may want to change that beneficiary designation to ensure that the proceeds from those accounts and policies go to the trust when you die – since any money paid directly to a minor heir could end up under the control of a guardian.
There are many assets that can be more effectively managed and secured by transferring them to your trust. Real estate property, vehicles, valuable art collections, and similar belongings can all be owned by the trust. At the same time, there are other assets that can be better managed outside of the trust. To know which are which, it is vital to get the guidance of an experienced trusts attorney.
Benefits You Might Not Have Considered
There are also benefits that many people never hear about. When you have assets within a revocable trust, you can enjoy some of the following advantages:
- Assets within the trust avoid the probate process, since the trust terms dictate how the estate gets distributed to your heirs.
- Assets within a revocable trust can receive additional FDIC protection beyond the standard bank account protection of $250,000. The FDIC provides each beneficiary named in your trust that same $250,000 in bank account protection, for up to the first five beneficiaries. That can be extremely helpful when your accounts are owned by the trust. If you have more than five beneficiaries listed, they could all be eligible for that same FDIC protection if the interest in the trust is divided equally among all beneficiaries.
- A trust can offer greater privacy for the settling of your estate when you pass away. Unlike probate, trust administration is a more private affair.
Are there Disadvantages?
Like anything else in life, revocable trusts are anything but a one-size-fits-all tool. They do have their disadvantages too. For example, they do cost more up-front, since you should have the help of an attorney to create and fund your trust. They also do nothing to help you avoid nursing home costs, estate taxes, or other tax obligations. Since they remain under your control, they offer little protection against lawsuits or creditors. So, if any of those concerns factor into your decision-making process, then it just might be that a living trust is not the right option for you.
For many Georgians, however, the revocable trust can be an ideal way to organize financial assets in a way that best facilitates their estate planning needs. At Fouts Law Group, LLC, we can help you to evaluate your estate planning options and determine whether a revocable trust is the right choice for your strategic plan. Our experience and expertise in every area of estate plan management helps to ensure that you always receive the best guidance and assistance available anywhere in the state. If you’d like to learn more about how revocable trusts can help you to accomplish your planning goals while maintaining maximum control over your assets, contact us online today or give us a call at (678) 242-8344.
