ARTICLES > Back
What is a Revocable Living Trust?
A Revocable Living Trust is a legal document a person creates during his/her lifetime that contains provisions regarding that person’s assets and financial wellbeing during all facets of the individual’s life, including taking care of matters if the person subsequently becomes mentally incapacitated or disabled, and asset disposition upon that person’s death. It is basically a private planning contract. The person who makes the Revocable Living Trust is called the Trustmaker (sometimes also referred to as a Grantor or Settlor). The Trustmaker appoints specific Trustee(s) to run the Trust according to his/her guidelines in the Agreement and also names specific beneficiaries (those who enjoy the benefit of the Trust assets) for during the Trustmaker’s lifetime and upon the Trustmaker’s death. Oftentimes, a person will be Trustmaker, the initial Trustee, and the lifetime beneficiary of the Trust, with named individuals to serve as Trustees upon that person’s disability and/or death. Upon the death of the Trustmaker, the Revocable Living Trust serves a purpose much like a Will, however if properly drafted and funded with the Trustmaker’s assets, it can avoid the expense, delay and lack of privacy of a Will because it does not need to be administered through the Probate Court.
For many, one of the most appealing aspects of a Revocable Living Trust is that it often avoids the need for a Guardian or Conservator to be appointed by the Probate Court to take care of a person’s financial affairs if that person becomes incapacitated or disabled during his/her lifetime. It is important to note that even if an individual has a Will, the Will does not address the issues of physical and mental incapacity because a Will is only effective upon the death of the Will-maker. Without proper planning, and even in some instances with a Durable Power of Attorney, a person’s decision making may be subject to review and administration by the Probate Court in the county where that person resides and/or holds real estate. Most people believe they can choose who should handle their financial matters and how it should be done much better than have a Probate Court involved to make those decisions with its lack of privacy, cost, and delay.
Lack of privacy is another reason many persons choose to utilize Revocable Living Trust planning. Family matters are highly personal and private in nature, and due to various circumstances and challenges certain family members may face, an individual may not want to disclose how, what and when a beneficiary (often a child) will receive his/her inheritance. Common situations that many people prefer to keep private in their planning include a beneficiary’s mental illness, spendthrift situation, estrangement, substance abuse, gambling and other addictions. A properly drafted Revocable Living Trust can optimally provide for a beneficiary with these challenges while keeping the matter private. In situations such as those named herein, often what is referred to as a “protective trust” is set aside for the particular beneficiary such that the beneficiary will be provided with assets for his/her health, education and maintenance, but will not control the monies outright, thus protecting that beneficiary from himself/herself. This is also an optimal planning vehicle for minor and dependent children as well as minor and/or adult children with special needs. The Revocable Living Trust is also a useful planning tool for Trustmakers who want to make certain their assets remain in their bloodline (in their family) after their demise.
A common misconception is that the Revocable Living Trust is only for the very wealthy or those who want to avoid taxes, especially Estate Taxes (death taxes). While the Revocable Living Trust is one of the estate planning tools of choice for these individuals, it makes good sense for those with more modest means to explore the possibility of this type of planning as well, especially for the purposes of avoiding the cost, delay and lack of privacy of Probate, incapacity/disability planning, and protective planning.
If you would like to know more about the Revocable Living Trust, please contact our office at 781.659.5900 or via email at planning@arlansonplan.com for a one-hour no-obligation consultation (without fee) and a complimentary Understanding Living Trusts Brochure.
> Back
|
