A revocable living trust is often created alongside a will. Doing so allows you to appoint a trustee and transfer ownership of your assets to them. This grants ownership to your trustee while you still retain control over the assets during your lifetime.
Revocable living trusts are distinguished from irrevocable trusts primarily by their ability to be altered or terminated at any time. It is far more difficult to change an irrevocable trust.
The Benefits of Revocable Living Trusts
Revocable living trusts (also called “revocable trusts”) offer many beneficial options to grantors and their loved ones. One of the most advantageous benefits of having a revocable living trust is that the assets included are not subject to probate after you pass away. Instead, because you have already named a trustee, the trust will remain operational.
Avoiding probate also means that your privacy is protected. Typically, probate proceedings for an estate are open to the public. However, your information is kept private because you have already selected a trustee.
Another benefit to a revocable living trust is that you can designate a trustee to take over and handle your affairs should you become incapacitated due to illness or an accident. This means that your spouse or children will not have to go through the process of naming an emergency trustee.
The Drawbacks of Revocable Living Trusts
There are some drawbacks to keep in mind regarding a revocable living trust. There are no direct tax benefits because you retain control of your assets. As such, you are required to report any income earned from the trust on your personal tax return.
Creating a revocable living trust can be an expensive and time-consuming process. The trustee must be given titles to assets such as vehicles, investments and bank accounts. The deeds must be reissued in their name.
When deciding whether to set up a revocable living trust, consider seeking legal guidance. Established 100 years ago, Quinlivan & Hughes ranks among the oldest and one of the largest law practices in Central Minnesota. The full-service law firm has growing legal teams in the areas of employment law, business law, government law, insurance defense, trust and estate planning, and general litigation. Learn more at Quinlivan.com.