A revocable trust is one type of trust. Trusts present many estate planning opportunities. The key feature of a revocable trust is that it may be revoked or amended at any time. Other trusts cannot be revoked. These are called “irrevocable”. In some States the revocable trust is called a “living trust.” Some of the purposes of a revocable trust are: To avoid probate at death, including more than one probate if you have properties in more than one state and prevent court oversight and control of the disposition of your assets if you become incapacitated. If your assets are held in a revocable trust, they may be more rapidly distributed to your beneficiaries than through the probate process. A properly drafted revocable trust may reduce or eliminate estate taxes. A revocable trust is difficult to contest and can prevent court oversight of minors’ inheritances. In that instance, you choose who oversees the minor’s monies. It can prevent problems that occur with joint ownership of property, and unintended results upon death. A revocable trust is not expensive to set up.
A trust like this works when you transfer your assets from your name to the trust over which you maintain control during your lifetime. Technically the trust owns everything you transfer into it, but YOU maintain control and can do anything you want to do with those assets during your lifetime. If you become incapacitated, the trust and not the court will control you assets. You do not have to have a separate tax ID for a revocable trust.
However, there are times when a revocable trust may not be a good idea. For example, when you need to protect assets for long-term care needs. This is because the assets in a revocable trust are fully countable, and will have to be spent down before you may seek Medicaid benefits.
Author: Attorney John S. Polgrean