Although a Last Will and Testament remains the most common estate planning document, a trust is not far behind in popularity. If you decide to add a trust to your estate plan, you will have to decide which type of trust to create. A Staten Island trust attorney at O’Reilly Law Firm PLLC explains several reasons why you might want to include a revocable trust in your estate plan.
A trust is a relationship whereby property is held by one party for the benefit of another. A Settlor (also referred to as a “Grantor” or “Trustor”) transfers assets into the trust that is then administered by a Trustee, appointed by the Settlor. Trusts can be divided into two broad categories – testamentary and living trusts. A testamentary trust is a trust that only activates after the death of the Settlor and is always revocable up to the time it activates. As the name implies, a living trust activates while the Settlor is still alive. Living trusts can be revocable or irrevocable.
Revocable Living Trust Advantages
The purpose of the trust and the goals you hope to achieve will dictate what type of trust you create. For example, among the many reasons to include a revocable living trust in your estate plan are:
- Avoiding probate. Probate is used to identify and value the assets of the decedent as well as provide creditors of the estate with an opportunity to file claims against the estate. If you use a Last Will and Testament to distribute your estate, the Will must be probated. That means the beneficiaries of the Will must wait until the conclusion of the probate process before receiving their intended gifts – a process that can take months to get through. The advantage to using a trust to distribute estate assets is that trust assets bypass the probate process altogether, allowing them to be distributed much faster. It also prevents your assets, and the assets that your beneficiaries will be receiving, from becoming a public record that can be viewed and utilized by unscrupulous people looking to take advantage of your loved ones in their time of mourning.
- Easy to modify. As the Settlor of a revocable living trust, you can modify the trust at any time and for any reason. This makes it easy to transfer assets into and out of the trust as well as to add or delete beneficiaries of the trust. You can also change the trust terms or replace the Trustee as often as you wish.
- Easy to terminate/revoke. Just as you can easily modify a revocable living trust, you can also revoke or terminate the trust at any time and without the need for a reason.
- Can protect the inheritance of minor children. A minor child cannot inherit directly from your estate. As the Settlor of a revocable trust, you appoint the Trustee, allowing you to decide who will protect and manage the inheritance you leave your children. In addition, a trust lets you stagger the inheritance you leave your children instead of giving them a lump sum and lets you decide when they receive those distributions.
- Helps with incapacity planning. If you become incapacitated, someone must take over the control and management of your assets during your period of incapacity. One of the many advantages to creating a revocable living trust is that it works as an incapacity planning tool by first allowing you to name yourself as the Trustee. Then name the person you wish to take over control of the trust assets in the event of your incapacity as your successor Trustee. You then transfer major assets into the trust and manage them as you always have. If you become incapacitated, however, control shifts seamlessly to your designated successor Trustee without the need for court interference.
Contact Our Staten Island Trust Attorney
For additional information, please join us for an upcoming seminar. If you have questions or concerns about incorporating a revocable trust into your estate plan, contact our experienced Staten Island trust attorney at O’Reilly Law Firm PLLC by calling 332-456-0500.
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