A common concern for some retirees is ensuring that their affairs will be taken care of in a manner in which the expect after they pass on. Unfortunately, many people make the mistake of thinking that a properly executed will is all it takes to achieve their legacy objectives. Fortunately, a revocable living trust can help.
What a Will Can’t Due
The primary limitation of a will is that virtually all assets transferred to heirs via a will must go through probate. The potential costs and delays associated with probate vary significantly by state. Still, imagine a year or more delay to have a modest estate cleared. Imagine your child having to go before a judge to properly claim an asset you clearly documented was to go to him or her. Imagine your child unable to quickly access your life insurance proceeds because your estate was your beneficiary. These are among the primary potential drawbacks of exclusively relying on a will to transfer your assets.
A Revocable Living Trust Can Mean No Probate
When assets pass via a trust, probate is unnecessary. Your heirs save both the time and the money associated with those potential legal proceedings. Furthermore, probate is a public event. Nearly anyone can come into the courtroom and observe the discussion. A trust, on the other hand, is a private affair.
More Complicated Situations Make A Revocable Living Trust Even More Valuable
It is not uncommon in today’s world for elderly people who, when they pass away, are married to people who are not the parents of their own children. Not surprisingly, an increasing number of people strive to accomplish two potentially competing objectives when planning for their inheritance: first, to financially support their surviving spouse and second, to leave an inheritance for their own children but not necessarily to the children of their last spouse.
It is nearly impossible to accomplish these objectives via a will, since a will passes title of your assets (be it a house or a bank account) with no further restrictions. A trust, on the other hand, can be purposefully set up to allow for certain funds or assets to be available for the surviving spouse during his/her lifetime but for the remainder, upon the death of the surviving spouse, to be passed on to the children of the first spouse to die. Furthermore, both spouses can create their own revocable living trusts to protect all their loved ones in the manner they individually see fit.
Revocable Means Flexible
Unlike some other trusts, a revocable living trust allows for the person arranging the trust to change the terms and even dissolve the trust at any point during his/her lifetime. So the risk of doing something you later which to change is mitigated because, like a will, if you’re still alive, you can make the changes you wish.