Are Revocable Living Trusts for Everyone?

09/25/2012

Revocable Living Trusts have been used in estate planning for a long time, but they are still often misunderstood.  Many people think that Revocable Living Trusts are complicated and are only used by the very wealthy.  This is simply not the case.  In general, a Revocable Living Trust can form the foundation of a good estate plan for people of all ages, personal backgrounds and financial situations.

When compared with a last will and testament, a Revocable Living Trust offers the following advantages:

  • A properly drafted and fully funded Revocable Living Trust will avoid the probate of assets after you die, while property that passes under the terms of a last will and testament has to be probated;
  • A Revocable Living Trust protects your privacy by keeping your final wishes a private family matter, while a last will and testament becomes a public probate court record for the world to see;
  • A Revocable Living Trust can and should provide instructions for the care of you and your property in case you become mentally incapacitated, while a last will and testament only goes into effect after you die.

With that said, Revocable Living Trusts are not for everyone. For example, if your main concern is avoiding probate after you die, then, depending on your family and financial situations, this can be accomplished without the use a Revocable Living Trust by way of beneficiary designations and pay on death accounts. The same goes for protecting your assets in case you need long term care - this may be able to be accoumplished with a durable power of attorney.  Each client must be evaluated on an individual basis and the pros and cons of using a Revocable Living Trust must be weighed against the client's real concerns and estate planning goals. Sometimes simple solutions will ease the client's concerns and achieve the client's goals, but sometimes they won't.