5 Benefits of Revocable Living Trusts

One of the most important things you can do to protect your assets and wealth for future generations is to have a comprehensive estate plan. This includes basic documents, such as a will and powers of attorney, but it should also include other tools, such as revocable living trusts, that can be customized to your needs now and your goals for the legacy you’ll leave behind.

A revocable living trust is a trust that holds specific assets and then transfers those assets directly to the beneficiaries according to the terms of the trust upon your death. A revocable trust gets its name because it can be changed at any point or revoked entirely if the grantor changes their mind. Learn more about the benefits of revocable living trusts and whether they might be right for your estate plan below. And while a Will may also be able to accomplish some of the goals below, you should analyze your specific situation to determine which is best for you.

1. Provides More Control Over Your Assets

One of the main benefits of a trust is that it gives the grantor much more control over what happens to their assets after their death than the standard probate process. Assets that go through probate are generally directly passed to the beneficiary in one distribution after the estate is settled, unless you have specifically drafted testamentary trusts within your Will. If someone dies without a will, they won’t even have control over who their beneficiaries are because the estate defaults to the state’s intestate laws.
A trust is a flexible tool because it allows you to create your own terms for how the assets should be distributed. For example, you can set milestones where beneficiaries receive lump sum payments or specific assets, such as real estate, when they reach a certain age, marry, or have children. This ensures you can tailor your estate plan exactly how you want it.

2. Allows for Changes in the Future

Trusts can be revocable or irrevocable, and while they both have pros and cons, one of the most significant advantages of a revocable trust is that the grantor can change any of the terms at any point. The trust can even be revoked entirely at any point during the grantor’s lifetime. This level of flexibility often gives grantors peace of mind that they aren’t locked into any decisions when they create the trust. This also provides the freedom to alter trust as other life changes come along. For example, you may want to add a beneficiary if a new grandchild is born or need to take someone off of the trust in the event of a divorce.

3. Avoids Probate

When someone dies, the estate must go through probate. This includes filing the will if one exists, providing notice to named and, possibly, unnamed beneficiaries, and waiting for the estate to be inventoried and settled before the beneficiaries receive their inheritances. This can be a lengthy process, and beneficiaries can end up waiting months or even years to receive their inheritances, depending on the estate and whether there are any disputes. Assets in a trust pass directly to the beneficiaries according to the terms of the trust upon the grantor’s death, which means the waiting period may be reduced.

Another advantage of avoiding probate with a trust is that it provides more privacy. Probate filings are part of the public record, which means that anyone can see a list of your beneficiaries and the terms of your Will. Assets held in a trust aren’t listed in the probate filings, giving both your estate and your beneficiaries more privacy.

4. Allows for Professional Asset Management

A revocable living trust is generally managed by the grantor until their death or incapacitation. At this time, the person named as the alternate trustee steps in to manage the trust. Grantors have complete control over who is appointed as a trustee. Many people choose to list a family member or close friend as a trustee, but you can also appoint a financial or legal professional. Doing so can benefit your beneficiaries by ensuring your assets are managed by a knowledgeable professional who can work to retain as much value as possible and grow the assets for a larger inheritance. A financial professional, accountant, or attorney can also explain how income tax rules for trusts work to ensure your beneficiaries have an accurate understanding of how their inheritance affects their tax burden.

5. Provides Peace of Mind for You and Your Loved Ones

Many people are worried about what the future will hold for their loved ones when they pass on, especially if they were the primary income earner or did most of the financial management for the household. Having an estate plan that includes a revocable living trust means beneficiaries can access their inheritances more quickly. It can also reduce the chances of disputes between beneficiaries that can happen when an estate plan is unclear or missing entirely. Having your wishes already established in a trust also means that loved ones don’t have to make decisions or wonder what you would have wanted when they’re grieving.

At Bratton Law Group, we help clients throughout New Jersey and Pennsylvania evaluate their estate planning needs and goals and create plans that reflect their future wishes and the values they’ve held during their lifetimes. We understand how important it is to have the peace of mind that your loved ones will have what they need after you’re gone. If you’re interested in learning more about the benefits of revocable living trusts or you have other estate planning questions, the team at Bratton Law Group is here to help. Take the first step by calling our office at 856-770-2744 to schedule an appointment with an estate planning attorney.