What Is A Revocable Living Trust?
Posted on Fri Mar 25, 2022, on Uncategorized
When considering the most appropriate option for protecting your assets and clearly outlining your wishes, we recommend a revocable living trust New Jersey families rely on from Klenk Law. There are several estate planning options available. When choosing the right type of trust for you and your family, you will want to have confidence in knowing that you have made the best possible decision. Meeting with our team at Klenk Law will be critical in answering your many questions. We assist you in making the best decision for your needs.
What is a revocable living trust?
Believing trusts are only for the wealthy elite is a common misconception. However, this is far from the truth. A revocable living trust is a trust created in your lifetime. You can easily update and change the trust. Typically, trusts involve three parties, the grantor (you), the trustee, and the beneficiaries. With a revocable trust, you can be all three. A trustee carries a significant responsibility but is primarily responsible for managing property and assets for heirs. Typically a trust will only become irrevocable when the grantor passes away.
What is the difference between a revocable and irrevocable living trust?
The primary difference between a revocable and irrevocable living trust are the terms at which you can make changes. A revocable living trust allows the grantor to make changes during their lifetime. Typically, an irrevocable living trust cannot be easily changed.
What are the reasons a revocable living trust might be right for me?
Revocable living trusts provide a variety of benefits for both you and your family. They help avoid probate. Because the trust owns the asset, not you, filing a will is unnecessary. Instead, the trust dictates who inherits. Other reasons to consider a trust include:
Help to avoid the need for guardianship should you become incapacitated.
Allows for more privacy when you pass away.
Ensures a smooth transition of assets.
How should I choose a trustee?
The appointed trustee will hold significant responsibility. While fit and able, you can serve as the trustee. The trustee oversees trust assets and their use. This could be over a long period of time, including when you are incapacitated. Because of this, choose someone you can trust. Further, someone who is committed to this role. Most often, the trustee is a trusted family member or friend. But, you can also select a financial institution.
How much control do I have over a revocable living trust?
One of the biggest fears people have is losing control of their assets when they place them into a revocable living trust. However, as the grantor of the trust, you can still retain full control. The trust can be set up to allow you to act as both the trustee and beneficiary during your lifetime, allowing you to make changes as needed. It’s not until you pass away or become incapacitated that your successor trustee will step in.
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When you have questions about revocable living trusts, look no further than Klenk Law. We understand the amount of pressure you may feel about protecting your assets and your estate and know that you want to do everything you can to make this process go smoothly for your loved ones. When it comes to revocable living trusts, there will typically be three parties involved.
The Grantor: The grantor, also known as the trustor or the settlor, is the person who created the trust in the first place. Typically, there is one person with the title of “grantor.” That said, married couples may choose to create a trust together.
The Trustee: The trustee of a trust is the person who is responsible for managing property and assets specified in the trust. Often, the grantor will name him or herself as the trustee while they are alive and pass on this title to another person when they die. The person who receives this title once the first trustee has passed away is the “successor trustee.”
The Beneficiaries: The trustor can name one or more people as a beneficiary to the trust. If the grantor decides to name themselves a beneficiary while still alive, they can receive income from the trust. When they pass away, other parties will fall into a beneficiary role, such as the grantor’s children.
Making Changes to a Revocable Living Trust
As noted above, it is possible to make changes to a revocable living trust. While the grantor is still alive, they have the power to do this. For example, if the grantor has significant life changes, like getting divorced, remarried, or having children, they may choose to change parts of their trust. When the grantor dies, though, changes cannot typically be made to the trust.
Advantages That Come with Living Trusts
When a person creates a revocable living trust, they will usually save money when it comes to expenses related to probate. Further, when the grantor dies, their property can often be quickly transferred to the beneficiaries without needing to wait too long. While there are many advantages to having a revocable living trust, it is not a substitute for a will. It can often be very advantageous for the grantor to create a will if they forget to name property in their revocable living trust.