Establishing a revocable living trust (RLT) allows a person to have a level of control over their assets while they are alive, and upon their death. This document provides a relatively quick and inexpensive way of distributing assets upon the death of the grantor. Unlike a will, which does not go into effect until the death of the individual, a revocable living trust affords changes as the grantor sees fit.
This written arrangement names the grantor (the maker of the trust), the trustee (the individual or entity responsible for distributing the assets), the assets (property covered under the trust), and the beneficiaries (those who receive the assets).
There are several pros and cons associated with the establishment of this instrument:
Pros
-- Bypass probate. Probate is the process of settling the estate of the deceased by resolving outstanding claims and dispensing the property within a will. It is not necessary for the assets to go through this process when they are covered under a RLT.
-- Modifiable. While the grantor is alive, changes can be made to the trust.
-- Separation of property. This benefit is valuable for married couples who each owned a considerable amount of possessions prior to getting married. The trust can be designated in such a way that separates those goods from the ones acquired during the marriage.
Cons
-- Cost of trust creation. The Internet may provide free trusts or trusts that can be purchased for a minimal fee, but if one prefers the document to be drafted by an attorney, it may cost thousands of dollars, depending on the complexity of the financial situation.
-- Re-title the assets. When the trust is set up, the grantor must re-title the property that is to be transferred into it. This process may require substantial amounts of time and financial resources.
-- Maintaining the trust. As the grantor acquires more property, it may be necessary to amend the trust so that it includes these things.
Information about estate planning can be located on Web sites such as Kiplinger’s, at http://content.kiplinger.com/yourretirement/legacy/.
