8 Reasons To Set Up a Revocable Trust
“How do I love thee? Let me count the ways.”
- Elizabeth Barrett Browning, Sonnet 43
One way to show your love for your family is to establish an estate plan. This is often simpler than you think — spending an hour or two with me to create your last will and testament and set up powers of attorney and asset transfer plans to ensure your assets transfer to your designated beneficiary are stress-free.
Revocable trusts — also called living trusts — are much less well-known and understood than a last will and testament. But, depending on your situation, a revocable trust may be an essential part of an effective estate plan — one that simplifies affairs for your family and ensures your wishes are carried out.
If someone has told you you need a revocable trust, you don’t necessarily want to take their recommendation at face value. Below are a list of reasons you may want a revocable trust. Read on, and then decide for yourself!
1. Avoid probate.
Because a trust is not a person, it cannot die, which means it is not subject to the court-supervised probate process. Assets titled in the name of the trust will transfer ownership under the terms of the trust. This means your assets will go to your beneficiaries without the time or expense required for probate.
2. Protect your children.
When you have children, it is common to create a Will that gifts all your assets to your spouse — with the expectation that they will eventually pass everything on to your kids. But, if your spouse remarries after your passing, that can complicate the situation for everyone involved.
A last will and testament only provides for one transfer, such as that first transfer to your spouse. However, a trust can cover multiple transfers of assets and can extend over several generations.
3. Keep your assets out of prying public eyes.
An estate that requires probate is a public record. In Iowa, all your assets at the time of death are listed on the estate’s inventory. Even the assets with a beneficiary designation, like a life insurance policy, are required to be listed on that inventory.
One common reason that an estate must go through probate is real estate in single ownership by the deceased. The best way to prevent real estate from being subject to probate is to deed transfer it to a revocable trust. In this case, your assets and their transfer will not be listed on the public record.
4. Make things easy on your spouse.
If you are married, your assets are likely in joint ownership. This means the assets will transfer easily when the first spouse passes away. However, most couples don’t consider that the surviving spouse is then burdened with creating an estate plan with new beneficiaries.
On the flip side, if you start out with a joint revocable trust, the estate plan is already established for the surviving spouse. A joint trust, in most circumstances, eliminates the need for the surviving spouse to take on the task of creating a new estate plan as a widow or widower.
5. Save several thousand dollars.
The cost of going through probate is significantly more than the cost of setting up a trust. Because probate requires an attorney, even a small estate without significant assets will require more than a thousand dollars in fees. Learn more about how probate fees are calculated and why an attorney is necessary for probate.
6. Fulfill multigenerational transfers.
Over the life of a trust, multiple transfers can be made. For example, if you have a vacation home, you can transfer it by deed to the trust. That means the home can be owned by you during your lifetime and then owned by a spouse or child. The real estate can even transfer to a grandchild or great-grandchild — all without going through probate.
7. Reduce the time it takes for heirs to receive their inheritance.
For even the most simple estates in probate, there is a statutory waiting period of four months from the time the notice of death is published in the newspaper before the estate can be closed and the assets distributed. Tax documents must also be filed, regardless of the size of the estate, which take 6-8 weeks to process. The most efficient attorney can open and close an estate in six months, but most estates take a year or more.
However, if your assets are held in a trust, there is no probate requirement. The trustee can begin acting immediately, using the authority granted by the trust.
8. Maintain control of assets during your lifetime.
Establishing a trust does not terminate your own control of your assets. A revocable trust can specify that you are the trustee during your lifetime and that you are the beneficiary of the principal and income of the trust assets.
Hope Wood makes it easy to set up a revocable trust. You can even add it to the Will in a Day® program.
First, learn more about my Revocable Trust Package, the ultimate estate-planning bundle.
If you know that you would like a Revocable Trust and would like to get started, schedule a time on Hope’s calendar, and select “Revocable Trust Consultation.”
Not sure whether a Revocable Trust is right for you? Schedule a consultation to talk about your specific asset transfer goals and learn whether it is the right fit for your needs.
Already have existing estate planning documents, but would like to learn more about adding a Revocable Trust? Schedule a consultation to learn how to incorporate a trust into your existing estate plan.
