By Jenny Kraft Kuchle
We recently posted regarding the use of the Indiana Transfer on Death Act in estate planning; a great, cost-effective approach for many.
We are frequently also asked about revocable living trusts, another estate planning tool, which can help manage your assets and transfer them after your death in accordance with your wishes. But is it right for you? Here are some considerations:
A revocable living trust is a legal document used as a part of many estate plans. It is in essence a legally binding set of instructions for the management and use of your assets both while you are living and upon your death. The document is drafted and signed while you are living and funded by the assets you choose, such as financial accounts and real estate. When added to the revocable living trust, your assets are re-titled in the name of the trust; rather than you being the legal owner, they are owned by the trust.
The creation of a revocable living trust is typically more expensive than a last will and testament, as the revocable living trust is a more complex document. It also requires more “leg work” on your part to establish this type of plan, as you must make certain your assets are re-titled to your trust after it is established.
However, the revocable living trust offers certain advantages that make it the right fit for many folks. A properly created and funded revocable living trust avoids probate, that is administration of a deceased person’s estate or assets through the court process. A revocable living trust can result in fewer court costs and attorney fees and faster distributions to your heirs.
A revocable living trust also offers you and your heirs privacy. A last will and testament, when probated, is made public for all the world to see. The revocable living trust does not need to be submitted to a court, so it is not part of any public record.
Flexibility is also a benefit of revocable living trusts. They can be changed during your lifetime. A “trust within the trust” can also be included, for example to continue to hold assets in trust for minors until they reach a certain age, or for heirs whom you expect may not wisely use their inheritance.
The pros and cons of a revocable living trust plan should be considered when you plan for your estate. The decision should be based on your specific situation and goals. At Lorch Naville Ward, our experienced and caring attorneys can help you determine if this tool is right for you.