Top 4 Reasons You Should Consider a Revocable Living Trust
A revocable living trust is an important estate planning tool that allows you to create clear instructions on how your property should be treated. We can explain estate planning basics, such as how this tool can be used as a part of your comprehensive estate plan.
Here are the reasons why you should consider a revocable living trust:
1. Avoid Probate in Virginia
Probate is a court-supervised process that formally qualifies a personal representative who helps wind up the estate of a person who is deceased.
There are many drawbacks of the probate process, including additional costs, taxes, fees, and delays. Many people are intimidated by this process. They also do not like the idea of their financial affairs being exposed to the public through a court administrative process that is triggered by the filing of a will with the probate court.
2. Plan for Incapacity
One of the most critical distinctions of a revocable trust vs will is that a will’s powers only exist if the person who prepared it passes away. It has no relevance if the person who writes it becomes incapacitated.
However, a trust allows for the immediate management of a person’s trust estate. The person who drafts the trust can manage his or her own trust assets anyway he or she wishes so long as this language is included in the trust.
If the person later becomes incapacitated, the successor trustee is authorized to take over the management of the trust assets and follow the instructions included in the trust in case the person passes away or becomes incapacitated. This provides for a seamless transition of trustee authority if the person who created the trust becomes incapacitated and needs someone to take over management of the trust assets.
3. Manage Out-of-State Property
If a Virginia resident owns real property somewhere outside of Virginia, the personal representative appointed to handle the Virginia probate case does not have legal authority with respect to that out-of-state property.
Instead, the personal representative is required to open an additional probate case in the state where the property is located. This ancillary probate proceeding adds additional costs, fees, and taxes.
4. Treat Your Provisions Like a Contract
A revocable living trust is a contract and governed by contract laws. A will is not a contract and is subject to the probate laws of the state where the person happened to be living at the time of his or her death. The probate laws of that other state may be significantly different than the state where the will was originally created.
For mobile clients who are considering moving to another state, a revocable living trust is usually a better bet because you can take it with you and be confident that your wishes will be carried out.
Contact an Experienced Trust and Estate Planning Lawyer
If you would like to create a trust that protects your family and your legacy, an attorney for wills and trusts at Golightly Mulligan & Morgan can help.
At Golightly Mulligan & Morgan, we listen carefully to our clients’ wishes and guide them through the laws that might impact these wishes. We take the information that we learn during confidential consultations to develop a customized estate plan geared to meet their needs.
In addition to preparing trusts, we also prepare wills and powers of attorney. We assist with all aspects of trust and estate planning and assist personal representatives with the probate process. If necessary, we can help clients have a guardian or conservator appointed if a loved one has become incapacitated.
If you would like more information on how to set up a living revocable trust, give us a call. We pride ourselves on making family estate planning approachable and understandable. We would love to have the opportunity to be of service to you and your family.
Secrets of Establishing a Revocable Living Trust and Avoiding Probate
Many individuals devising an estate plan are motivated to avoid probate in Virginia for good reason. The probate process can be long and tedious, holding up funds needlessly from your beneficiaries. A revocable living trust can help avoid this process by transferring your assets to a trust to be privately administered outside the supervision of the court.
Elements of a Revocable Living Trust
A revocable living trust is established by creating a trust agreement in which the grantor transfers the assets named in the trust to be managed by an appointed trustee for the benefit of his or her beneficiaries. The assets are legally owned by the trust and not by the individual. Therefore, when the grantor passes away, he or she does not own the assets and they are not part of the probate estate. This process helps grantors avoid probate in Virginia.
Funding a Revocable Living Trust
At Golightly, Mulligan & Morgan, our trusts and estates attorneys often see clients come in with formal trust documents that are well organized and thorough. However, Mr. Golightly has encountered many such trusts that contain a blank schedule of assets. The schedule of assets should include all property owned by the trust. While another trusts and estates attorney may have established the trust to hold property, without assets being added to the schedule, the trust fails to serve its purpose.
To successfully avoid probate, the trust must own the assets. If you own assets individually at the time of your passing, these assets will most likely go through the probate process, defeating the purpose of the trust in the first place.
You can work with our estate planning attorneys to properly fund your trust by having proper deeds drawn up, transferring ownership and changing the beneficiary designations on retirement accounts, annuities or life insurance.
Contact an Experienced Estate Planning Lawyer
If you are considering establishing a living revocable trust, it is important to contact an experienced lawyer for trusts and estates. Our lawyers at Golightly Mulligan & Morgan for trusts and estates take pride in our ability to provide comprehensive family estate planning strategies that protect our clients’ interests and their loved ones. Our trusts and estates lawyers can talk to you about your final wishes and come up with an approachable plan that is tailored for your needs.
Call us today at 804.658.3873.
What Is a Revocable Living Trust in Virginia?
A revocable living trust is a powerful estate planning tool that allows someone to provide a set of detailed instructions about how they want certain assets to be treated – both during life and at death.
An attorney for wills and trusts can talk to you about your needs and advise you on what type of trust provisions may be able to address them.
What Is a Trust?
To understand what a revocable living trust is, it is important to understand the foundation of trusts generally. A trust is a legal arrangement in which you, the grantor, or person making the trust, instruct the trustee that you name to manage the trust assets for the benefit of the designated beneficiary.
In some trusts, you may have all three roles as the grantor, trustee, and primary beneficiary.
The trust assets can be managed for your benefit during your lifetime. This allows you to develop an estate planning tool with the help of a revocable living trust attorney that plans for what you want to happen to your assets after your passing, as well as to provide you with some safety in the event of incapacitation.
As the person making the trust, you get to say how you want the trust assets used. If you encounter a medical issue, you can provide in the trust document that trust funds will be used for your health and general welfare.
A revocable trust is one that you are free to revoke or modify at any time. Having a revocable living trust in place allows you greater flexibility because you can change the instructions of the trust if an unforeseen need arises. Revocable trusts become irrevocable at the time of your death, and the successor trustee follows the instructions in the trust document regarding your property.
Your trust may instruct the trustee to pay for the health, education, and general welfare of your beneficiaries as needs may arise, to give lump-sum distributions at certain ages, or to provide for beneficiaries in another manner that you designate in your trust.
What Are the Benefits of a Revocable Living Trust?
In addition to the greater degree of control and flexibility that revocable living trusts provide, another major benefit is that you can avoid the probate process by using a trust. Probate is concerned only with the assets that you own personally in your own name at the time of your death. When you place assets in the trust, the trust – not you personally – becomes the new owner of those assets.
How Can I Create a Revocable Living Trust?
The lawyers specializing in wills and trusts at Golightly, Mulligan & Morgan are dedicated to providing every client with personalized attention. They take the time to understand your needs and draft a trust that addresses them. They put our knowledge and experience to use by creating a customized document that ensure your wishes are carried out.
Revocable Trusts vs. Irrevocable Trusts
One of the most common questions we receive in our estate planning practice is, "What is the difference between a revocable trust and an irrevocable trust?" In this blog, we will provide a brief overview of the key differences between these types of trusts and give a few examples on why estate planners use them.
A revocable trust is often also referred to as a "living trust." Estate planning lawyers use revocable living trusts to avoid court supervised probate, which often allows for the efficient and expedient distribution of a decedent's property. As its name implies, a revocable living trust is easy to amend or revoke. Indeed, for all intents and purposes, assets owned by revocable living trust are handled much in the same way as assets owned by an individual. For example, while the creator of the trust is still alive, these types of trusts do not file their own tax returns because income flows directly to the person who created the trust, often called the "grantor."
On the other hand, an irrevocable trust is often used by estate planning attorneys to allow clients to either remove assets from the client's estate for estate tax purposes, or to provide added asset protection features. The primary concept behind an irrevocable trust is the fact that the person who set up a trust no longer has ownership and control over the assets placed inside the trust. Because such a trust may only be changed under very limited circumstances, the person who created the trust may avoid or mitigate estate taxes otherwise due on those assets when he or she dies. With the proper planning, a client may also be able to use an irrevocable asset protection trust to exempt trust assets from a tort creditor or in a bankruptcy proceeding.
Although irrevocable trusts have somewhat limited application these days due to the high estate tax exclusion (currently, estate taxes only hit individuals with more than $11,200,000), we do use these trusts for asset protection purposes. Conversely, we use revocable living trusts in our practice quite a bit to allow clients to avoid the probate process. You may read more about the probate process in our "what is probate" blog here on our website.
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