How would it make you feel if you knew after you passed away everything you ever owned ended up here for years. Your children have children and still everything you wanted to pass along to your heirs after your death is still locked up in court. Is there a workaround so this doesn’t happen?

Yes! It’s called a Living Trust.

Exactly what is a Revocable Living Trust?

A living trust is a legal document which allows an individual to transfer ownership of titled and personal property from their name to what’s called a trust. Once property is transferred to the trust, the trust becomes the legal owner. Even though the individual no longer “legally” owns the property, they can remain in control of all assets in the trust as long as they are alive. That is why it is called a “living” trust as it is created during one’s lifetime and “revocable” because it can be changed or rewritten as often as desired and could be revoked entirely at any time before one’s death.

The main advantage of a living trust over a will is that when you pass away the directions you left in the trust are executed immediately. If you chose to use a will instead of a trust, your estate could end up in probate court if there are any objections or challenges to it. The last thing one wants to see is family bickering for years over your stuff. One disadvantage, though, is that a living trust can be expensive to set up.

Why a Living Trust is Important For Business Owners

This one’s simple. What happens if you own a family restaurant, you are the sole owner but some of your family works there . . . then you pass away. What happens then? What if as a business owner you have become quite wealthy with a lot of assets and you pass away - then what? What if partners were involved or real estate? A living trust will tell.

What Revocable Living Trusts Do

1. Protecting property for beneficiaries, especially minor children. However, sometimes our intended beneficiaries just aren’t able to handle an inheritance. Many states don’t allow minor children to own property and if there is no trust in place the state will appoint a court executor to manage the estate until they are of legal age. Of course this is not a free service and expenses may be taken from the estate itself.
2. Reducing or eliminating estate taxes are a very popular reason for people to have a living trust. For most people the advantage of certain deductions and credits allowed under the tax laws are very advantageous. If an individual dies this year and has a living trust in place, a personal property inheritance of up to $2,000,000 is exempt from federal estate taxes.
3. Avoiding probate by putting your property in a revocable living trust is the best way to avoid large attorney fees. The trust lists the designated beneficiaries as you specified. If you do not have a living trust your assets are split among living heirs by a court appointed attorney. This can take years to work out. If property is not debt free, revocable living trusts are able to distribute property much more quickly and with much less cost than is possible through court probate and attorney fees.

Physicians Directives and Burial Instructions

There are very important issues that need to be dealt with prior to someone’s death. It is always best not to put the burden on grieving family members whether or not you would want to be placed on life support. By making your wishes known and documented inside a living trust it relieves them from having to making those decision for you. You have documented your wishes clearly, witnessed and notarized inside your living trust. Most people have specific wishes or beliefs on their burial. Again when family is grieving it is hard to remember what their loved one voiced. Making arrangements becomes extremely difficult. With a living trust it is spelled out exactly what kind of funeral they prefer, burial or cremation leaving no guilt or frustration with the surviving family members wondering if they did the right thing.

Conclusion

If the answer to the question in this article’s title is not yet clear, a revocable living trust can save your family a lot of heartache by spelling out exactly how you want to see your estate passed down after you pass away, thus avoiding possible years of court filings tearing a family apart. Also, it can be used as a vessel to tell your family what your wishes are should you be on life support. If you’re a business owner (or not), you should definitely consider setting up a living trust. I like revocable living trusts so that I may change them as I see fit, unlike an irrevocable living trust.

Contact Theresa Hoff to learn more or set up a Living Trust.