Hopefully, you have already prepared a basic estate plan: Will, durable power of attorney, and healthcare power of attorney. However, you may have heard of a revocable living trust. Before deciding to create and fund a revocable trust, you need to consider some of the pros and cons.
Why should I add one to my estate plan?
There are several excellent reasons to create and fund a revocable living trust:
- Avoiding Probate. Many people hope to avoid having their estate go through probate. It can be time consuming, expensive, and frustrating for their heirs. However, the assets contained in a revocable living trust generally pass directly to beneficiaries without the need for probate.
- Maintaining Confidentiality. When a Will is presented to the probate court, it becomes part of the public record. Anyone can review your Will and related court documents. However, trusts rarely become public, which means few people will know what property was inherited and by whom.
- Addressing Disability or Incapacity. The person who creates and funds the trust is called the grantor. Most grantors also serve as the trustee. If the grantor becomes incapacitated or unable to continue as trustee, the successor trustee named in the trust document can step in.
Whether you need a revocable living trust or not depends on your individual circumstances.
Are there are reasons why I should not create a revocable living trust?
Yes, revocable living trusts are not the best option for everyone. Some assets are best left out of the trust. In addition, you may not want to establish this type of trust for the following reasons:
Limited Asset Protection. Some trusts are designated to protect your assets from creditors and civil judgments. Revocable living trusts do not provide asset protection. If this is a concern, talk to your attorney about creating an asset protection trust instead of a revocable living trust.
Taxes. The grantor still owns the property that is transferred to the trust. When it comes time to calculate estate taxes, the value of the trust assets generally will be included. If you need advanced tax strategies, talk to your estate planning attorney about other more beneficial options.
Should you add a revocable living trust to your estate plan?
That depends on a number of factors. However, you should never create a trust without the advice of an experienced Alabama estate planning attorney. Unintended consequences could negatively affect you and your heirs.
Attorney Bruce Adams is an Alabama attorney who knows how to listen to his client’s estate planning concerns and provide actionable advice. Please contact Bruce at 256-237-3339 to set up an appointment. Our office is located in Anniston, Alabama, but we assist clients in surrounding communities like Gadsden, Hoover, Talladega, Vestavia Hills.