Your estate plan might include a variety of documents, including a will and an advance directive. You might also create a trust. There are many different kinds of trusts that can serve different purposes, depending on your estate planning goals.
A revocable living trust is one of the more common trusts utilized by those thinking about their legacies. It allows someone to control what happens with their assets after they die without completely relinquishing control over those assets while they are still alive.
Understanding the basic features of a revocable living trust can help someone thinking about integrating a trust into their comprehensive estate plan.
You can change your trust as your situation evolves
Some kinds of trusts are out of your control after you finalize the documents and fund the trust. The trustee will use your instructions to manage and distribute trust assets, and you will not be able to change those instructions even if your circumstances change in most cases. A revocable living trust gives you the opportunity to make updates to the trust, such as removing a beneficiary.
You can reduce the risk of probate challenges
The more property you intend to leave for the next generation, the more likely it is that your loved ones will fight over those assets. A revocable living trust is harder for people to challenge in probate court than a basic will and will therefore reduce the likelihood of probate litigation eating up some of the assets you intended to leave for specific people or charitable causes.
It protects you later in life
Your irrevocable living trust can be a key form of financial and legal protection if you experience incapacity later in life. Whether you have an accident that leaves you with a brain injury or you experience cognitive decline as you age, your trust can protect you by providing you with assets and also preventing other people from having total control over your property.
Typically, you will need to carefully consider the structure of the trust and who you name as trustee. It is important to note that if you are one of the trustees, that may diminish the asset protection offered by the trust. You will also need to fund the trust with certain assets, which will then mean they don’t have to pass through probate court after you die.
Making sense of the unique features of a revocable living trust can help you decide if it is the right kind of trust to add to your estate plan.