New Jersey Estate Planning Lawyer
A revocable living trust is a legal document created by an individual, also known as the grantor or settlor, which places assets into a trust to be managed by a trustee. The trustee can be the grantor, a family member, a friend, or a professional. The trustee is tasked with managing the assets in the trust for the benefit of the beneficiaries.
The grantor retains control of the assets in the trust and can make changes to the trust, as well as revoke it, at any time. Upon the death of the grantor, the assets in the trust will pass to the beneficiaries according to the terms of the trust.
A revocable living trust is a great tool to help your assets pass smoothly to your beneficiaries. It can also significantly reduce the headaches of the probate court. However, while some assets belong in a trust, others cannot (or should not) go into one. Kiplinger’s recent article entitled “What Assets Should Be Included in Your Trust?” says that a revocable living trust is a document that’s created to protect your assets during your lifetime. It also creates a way to seamlessly pass your assets at your death.
The biggest benefit of creating a trust is that it can help avoid probate. Placing your important assets in a trust can give you peace of mind knowing assets will be passed onto the beneficiary you designate, under the conditions you choose and without first undergoing a drawn-out probate process.
Avoiding probate helps you maintain control over your estate. Probate is a process where a will is presented to a court and validated, and can be a long and costly. When you have a trust, the assets in the trust bypass probate and are passed directly to the beneficiaries you designate. Helping your loved ones avoid probate will save them time, money and frustration.
There are a few drawbacks to consider with a revocable living trust, including:
Many people think that once they sign the trust documents at their attorney’s office, they’re good to go. Setting up a trust is just half of the job. For a revocable living trust to take effect, it should be funded by transferring assets into the trust. You can fund a living trust with real estate, financial accounts, life insurance, annuity certificates, personal property, business interests and other assets.
There are two kinds of living trusts: revocable and irrevocable. A revocable living trust is a document that you create which says that somebody else (the trustee) will manage your assets for you. You can still change the trust or get rid of it anytime you want. The trustee can be you, a family member, a friend, or a professional. When you die, the assets in the trust go to the people you said they would go to in the trust document.
An irrevocable living trust is similar to a revocable living trust but with one big difference: once you put something into an irrevocable living trust, you can't take it back out! This kind of living trust is good if you want to give some of your money or property to somebody and make sure they get it no matter what happens.
For example, let's say you have a valuable painting that you want to leave to your grandchild. You could put the painting in an irrevocable living trust. That way, if something happens to you and you need to sell the painting to pay for medical bills, your grandchild will still get the painting when you die because it's in the trust.
Both revocable and irrevocable living trusts have benefits and drawbacks. It's important to talk to a financial advisor or estate planning attorney to see if a living trust is right for you.
While some assets belong in a trust, others cannot (or should not) go into one.
Some examples of assets that can be placed in a revocable living trust are:
People often ask if it’s wise to place their house in a trust. Considering that your home is potentially one of your largest assets, living trusts can be especially beneficial. A trust can transfer real estate quickly. They also help avoid the hassle of separate probate proceedings for land, commercial properties and homes that are owned out of state or held in different counties. However, property with a mortgage must be retitled in the name of the trust. Some lenders may be reluctant to do this.
Financial assets that can be placed in a revocable living trust and trust document should state who is authorized to make transactions on behalf of the trust. For example, if you want your spouse to be able to manage the trust's investments, you would list them as the trustee. You can also name a professional trustee, such as a bank or trust company.
There are several types of financial assets that can be owned by a trust, here are some examples:
Some examples of assets that cannot (or should not) be placed in a revocable living trust are:
Revocable living trusts are a powerful estate planning tool. Creating a trust will make the inheritance process much easier on your beneficiaries. To ensure your trust performs as it is intended, work with us, an experienced estate planning law firm.
To discuss whether your estate plan should include a Revocable Living Trust or another estate planning tool, book a call with the Law Firm of Benjamin D. Eckman with offices in the Wayne, Union and Hackensack
Reference: Kiplinger (Jan. 16, 2022) “What Assets Should Be Included in Your Trust?”
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