The decision to set up a revocable trust is less about a specific net worth and more about your goals and the complexity of your estate. Just about everyone can benefit from a revocable trust and let’s dive into some of the main features.
When thinking about creating or modifying your estate plan, evaluate your goals. There are many reasons to consider a revocable trust. The top three reasons my clients choose to create a revocable trust are: to avoid probate, privacy, and complex family situations.
If given the choice, most people would not want to have their estate go through the probate process. Probate is the legal process of validating a will and distributing assets. A judge oversees this process of estate distribution. As you can imagine, probate is slow and expensive and does not provide any creditor protection after your death; nor does your family have any privacy or control, and it can easily be contested in court. A trust will allow your assets to pass directly to your beneficiaries without going through the probate courts.
The second reason people choose to create a trust is the privacy factor. Wills become public during the probate process, while trusts remain private documents. If your goal is privacy and confidentiality for your financial affairs, a trust is the way to go.
The third main reason I would list my clients choosing to draft a revocable trust would be complex family situations. If you have a blended family with children from multiple marriages, maybe a beneficiary with special needs, or want to put specific rules on how your assets are distributed over a period of time, a trust will give you greater flexibility and oversight. Additionally, if you anticipate family disputes upon your death or challenges to your will, a trust can provide greater protection.
Those are the top three main reasons my clients choose a trust, those are not the only benefits. Depending on the size of your estate, a properly drafted, fully funded revocable trust can eliminate or reduce federal estate taxes. Congress has the power to set and change the estate tax limit at any time. Generally, the larger your estate, the more money a trust can save your family in taxes.
An additional benefit while you are alive for using a trust is the protection it provides you against probate court if you become incapacitated. If, unfortunately, you ever become physically or mentally incapacitated, having a trust prevents a court conservatorship because your successor trustee may step in at that point and handle your finances for you.
If you are ready to get started on creating your estate plan, contact us today and we can help you navigate you through this process.