Revocable Living Trust
A revocable living trust is a legal entity created during the maker’s lifetime that places their assets into a trust that will be distributed to the benefit of one or more beneficiaries upon the creator's death. It is a common estate planning tool since it outlines who will receive ownership of your assets or property when you die and has the added benefit of avoiding the probate process. Unlike an irrevocable trust, designating the living trust as “revocable” enables you to change or cancel the trust at any time. While a living trust requires a certain amount of effort to put together, a revocable living trust is a good choice for someone who appreciates the ability to maintain final control. The individual who creates the trust is known as the trustmaker or grantor, while the trustee is the individual or institution responsible for the administrative duties of the trust. Normally when you create a living trust you designate yourself as the trustee, meaning that a successor trustee will need to be named. However, someone such as an attorney or even a financial institution can be assigned as the trustee. Moreover, the beneficiaries of the trust are those who are set to benefit by receiving assets from the trust at the time of your death.
Questions and Answers About Revocable Living Trust
How is a living trust any different from a living will?
Many people use a living trust as an estate planning tool because it helps to avoid the probate process, reduce the chance of court dispute, and, unlike a living will, keeps the details of the trust private upon your death. Probate is a relatively slow process that distributes your assets per your after-death stipulations. With a living will, it may take up to several months to wait for a court order to start the process of transferring your assets to the beneficiaries of the will. Additionally, if your properties are in another state, your beneficiaries may have to go through multiple probates with the associated costs lowering the overall amount that your beneficiaries were set to inherit. A living trust is also designed to not only assist in after death arrangements like that of a living will, but to also protect your assets when you are alive and well or alive but incapacitated. The key advantage to this is that it enables your trustee or successor trustee to take care of the account assets and administrative duties while you are still alive and well or in the case of incapacitation.
Are my assets in the recoverable living trust insured?
Your assets inside the living trust are insured by the FDIC up to the amount of $250,000 for each beneficiary. However, the exact amount of coverage depends on the number of beneficiaries.
What do I need to do to prepare for setting up a living trust?
It is important to write down a thorough inventory of all the assets and/or property you own and who you would want to designate as beneficiaries for each asset and/or property. You will also need to think about who you will want to assign as the trustee or successor trustee of the living trust.
Will a revocable living trust reduce my estate taxes?
Unlike an irrevocable living trust, no estate tax benefits are available for a revocable living trust. Since you retain the ability to revoke or change the trust property, assets inside the trust are still included in your gross estate.
How do I open a revocable living trust?
Each of our advisors at Florida Financial are knowledgeable on the different types of living trusts available and can help guide you to make sure a revocable living trust is the right choice for you. Contact us today for a free consultation.
Note: FFA does not provide legal advice.
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Helpful Resources:
- Controlling the Distribution:
How can I control the distribution of my estate? - Living Trusts:
How can a living trust help me control my estate?
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