CNBC reported that only 33% of adults in the U.S. had an estate plan in 2022. At a minimum, most people should have a will and a revocable trust.
A revocable living trust is a legal arrangement that allows individuals to manage and distribute their assets during their lifetime and after their passing. This estate planning tool offers flexibility and control, and it operates under straightforward principles that make it a popular choice for many.
To establish a revocable living trust, you, as the grantor, create the trust document. This document outlines your wishes regarding the management and distribution of your assets. You then transfer ownership of your assets into the trust’s name, designating yourself as the initial trustee.
As the initial trustee of the revocable living trust, you retain full control over your assets. You can buy, sell or manage them as you see fit. This flexibility allows you to make changes or adjustments to the trust as your circumstances evolve.
In your trust document, you designate a successor trustee to manage the trust in the event of your incapacity or passing. This person will take over the management and distribution of the trust’s assets according to your wishes.
One of the primary advantages of a revocable living trust is its ability to avoid the probate process. This means that your beneficiaries can receive their inheritances more quickly and with fewer expenses.
Unlike wills, which become public records upon entering probate, the contents of a revocable living trust remain private. A revocable living trust also provides a high degree of flexibility. You can modify or revoke the trust at any time as long as you are mentally competent.
A revocable living trust is a versatile and efficient estate planning tool. By understanding how a revocable living trust works, you can make informed decisions about your estate plan.