What is a Revocable Living Trust?
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Revocable Living Trust Lawyer
As the laws continue to change and develop, more and more people are looking to trusts as the foundations of their estate plans. A trust is a document that can serve as a vehicle that allows you to direct the management of your assets during your lifetime and after your death. There are various types of trusts, and one type of trust may serve your unique needs better than others. These trusts can include, Revocable Living Trusts, Special Needs Trusts (a.k.a. Supplemental Needs Trusts), Irrevocable Trusts, Pet Trusts, NFA Firearms Trusts, Qualified Personal Residence Trusts, and many more.
Typically a will is the first and most familiar choice for passing on an estate to inheritors. However it’s not the only choice. In addition to being one of several ways to avoid probate (the legal process to determine whether a will is valid and then administer it according to the law under court supervision) living trusts can offer before-death and after-death advantages.
Whether a revocable living trust is right for you depends on your specific situation and circumstances.
What is a revocable living trust?
A revocable living trust is a written agreement whereby you (the grantor) designate someone to be responsible for managing your assets and wealth (the trustee). Generally, while you are alive and mentally competent you will be both the grantor and the trustee. This is referred to as a living trust because it is established while you’re alive. It’s “revocable” because, as long as you’re mentally competent, you can change or dissolve the trust at any time at your own discretion. Typically, a living trust becomes irrevocable and cannot be changed when you die.
What is the difference between a living trust and a will?
Both a will and a living trust contain your inheritance instructions on distributing your assets and wealth. However, a living trust has several advantages over a basic will. The following are just a few of the potential advantages to trust based planning:
Wills only become legally effective upon your death. Revocable living trusts, on the other hand, are legally effective during your lifetime and after your death. Therefore, a living trust can be used to plan for your own potential incapacity, whether due to an accident, an illness, or the effects of aging. Your living trust can provide detailed guidance for your care and provide a loved one chosen by you (instead of the court) with the legal authority to make important decisions about how your money and assets are used when you can no longer make those decisions for yourself.
A revocable living trust does not become part of the public record unless a trustee or a beneficiary demands court approval of accounts, whereas probate records are public always open to the public.
Avoidance of Probate
Assets owned by an individual at death must go through the probate process to be legally transferred to the intended heirs or beneficiaries. The probate process can be time consuming and expensive, averaging around a year in length and taking significantly longer for more complex or higher net worth estates.
Protection for Minor Beneficiaries
If you leave assets directly to a minor through a will, the courts will be even further involved. Beneficiaries under 18 years old will need to have a guardian appointed (often even if they have living parents) who is legally responsible for managing the child’s inheritance until they turn 18. The process of having a guardian appointed can be costly and cause unnecessary delays in the estate distribution. Guardianship also requires an initial inventory and annual accountings to be filed with a Commissioner of Accounts (a representative of the court responsible for monitoring estate administrations), each of which have associated costs.
However, if you leave assets in trust for a minor, your chosen trustee can manage the assets for the beneficiary until they are old enough to handle the assets themselves (at a time set by you, not the government). Until the child is old enough to receive their inheritance, your trustee can make distributions for purposes which you have chosen (often for their health, education, maintenance and support). This does not require any court involvement and reduces the costs and administrative burdens.
Assets that you leave to a beneficiary outright through a will are then potentially subject to their creditors. This means that the assets can be used to satisfy legal judgments against them (i.e. lawsuits, accidental injury claims from car accidents, divorce decrees, etc.). Whereas, assets left in trust for a beneficiary’s benefit can be protected from their creditors, legal judgments, and divorce proceedings.
Protecting Beneficiaries from Themselves
Many young adults are not responsible enough to manage the windfall that even a modest inheritance provides. Often these young beneficiaries are unintentionally wasteful, and your hard earned life savings becomes their lesson in financial management. By placing assets in your revocable living trust for the benefit of your younger beneficiaries until they are a little older and wiser you can protect them from making costly mistakes that they will regret later.
While trusts serve a valuable purpose in many situations, for some folks with relatively modest estates, wills are adequate and generally less complex than trusts.
What can a revocable living trust do for you?
It can provide you with the peace of mind that comes from knowing that your wealth and your heirs will be safe in the event that you suddenly become unable to handle your own financial matters. It can eliminate the need for your estate to pass through the costly and complicated probate court process before it can be passed on to your beneficiaries. It can protect your loved ones from creditors, lawsuits, divorce, and even themselves. A living trust can provide you and your loved ones with these benefits and many, many more.
How a Virginia Revocable Living Trust Attorney can help
The Law Office of Richard W. Hartman III, Attorney & Counselor at Law, PLLC offers competent and caring living trust advice, creation, and administration services to its clients in and around Vienna, Virginia. The firm has the extensive, up to date knowledge of trust and related tax law needed to properly draft and divide a living trust and its assets on behalf of a surviving spouse and any other trust beneficiaries to provide peace of mind and to maximize an estate plan’s benefits.
The Law Office of Richard W. Hartman III strives to:
– Offer complete, understandable legal advice to the grantor and successor trustees.
– Ensure that all paperwork and proceedings have been correctly handled without delay.
– Perform the firm’s duties with sensitivity, understanding that bereavement can be very difficult for the family and loved ones.
– Listen and understand your situation and make every effort to satisfy your requests and help you achieve your trust and estate related goals and objectives.
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