A revocable living trust (sometimes referred to as a family trust) is an estate planning tool that allows you to control how your assets are managed and used while you are alive and well, if you become incapacitated, and after you die—all without the need for court intervention.
A revocable living trust can also be used to minimize or eliminate estate taxes upon your death, and to safeguard your assets from your loved ones’ financial immaturity, their creditors and judgment debtors, their possible bankruptcy, and even their potential future divorces.
The Benefits of a Revocable Living Trust-Based Estate Plan
If you set up your estate plan based upon a revocable living trust, you will reap the following benefits:
You have a built-in contingency plan in the event of your incapacity.
Your successor trustee can step in and take over the management of your assets while you are still alive if you are no longer able to handle this function for yourself. He or she can take over this role without any need for a court proceeding so the transition is a completely private event.
You can avoid the public, time-consuming stressful probate process.
Upon your death, your successor trustee is authorized to take over the management of your assets without any need for court intervention or supervision. This person already has clear instructions in your revocable living trust as to who should now benefit from the assets because your trust contains explicit instructions about who your beneficiaries should be after you die.
Your loved ones can have immediate access to your assets after you die.
If you have a spouse or children who depend upon you for their financial survival, they will not be subjected to a six-plus month probate period where your assets may be frozen, during which they may have to petition the court for access. Instead, they can continue to benefit from your assets as needed right away.
If you are at risk of paying estate taxes upon your death, your revocable living trust-based plan can include tax-saving strategies to minimize or even eliminate this risk.
If you have concerns about the financial maturity of your future heirs, you can set up restrictions on their right to manage or access their inheritance, and you can even protect their inheritance from their own creditors, potential lawsuit judgments or bankruptcy, and divorcing spouses.
The Three Parties to a Revocable Living Trust
- THE GRANTOR
The person who owns the assets that will be transferred into the
trust. - THE TRUSTEE
The person who manages those assets. - THE BENEFICIARY
The person who is getting the benefit of those assets.
While you are alive and well, you would be all three of these roles with respect to your revocable living trust: you are the grantor, the trustee, and the beneficiary. In other words, you are transferring your assets into your trust, which you will then manage for your own benefit during your lifetime. This will not feel any different to you from how you are used to dealing with your assets now.
However, when you first establish your trust, you will name other people to serve in the various roles down the line. For example, you will name successor trustees to take over the management function when you become disabled or die, and you will name beneficiaries to get the benefit of your assets upon your death. Because the trust is revocable, you can make changes to these choices any time you want for the rest of your life.
You don’t want to be penny wise and pound foolish when it comes to your family’s future. In the end, estate planning is not something we do for ourselves.
It is a gift we provide for those we love.
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Creating a Revocable Living Trust Alone is Not Enough
The key to making a revocable living trust-based estate plan work is to ensure that you have properly transferred your assets into your trust as soon as it is created. If you die and some or all of your assets are not held in the name of your trust, they will have to go through the court-supervised probate process in order to be transferred to your loved ones, defeating one of the benefits of your trust-based plan.
I was talking to a friend recently who had done a do-it-yourself estate plan through some Internet forms. I asked her if she had created a living trust. She was pretty sure that she had, but when I asked her if she had ever funded her trust, her eyes got really wide. She had no idea she was even supposed to do that, let alone how she would go about doing it.
This is one of the reasons I would strongly caution you about thinking of estate planning as a set of documents. You are going to get a very false sense of security if that is your framework. Estate planning is really a series of decisions you need to make and actions you need to take. Internet form documents don’t provide legal advice or implementation guidance.
My friend thought she had been a responsible parent by putting this plan together, but her plan would not have actually worked for her if something had happened. In fact, by failing to transfer her assets into her trust, she was actually ensuring they would have to go through the probate process to be transferred and distributed.
Proper legal advice is critical to ensure you are not only establishing a revocable living trust that will meet your unique needs, but that you are properly transferring your existing assets into it, and properly acquiring all future ones in the name of your trust. A good estate planning attorney will help you do this up front, and will also help you monitor your trust for the long-term to be sure you continue to keep it up to date as your needs and assets change.
What does it Cost to Establish a Revocable Living Trust?
- Make sure that if you are taking action to plan for your family’s future well-being, you are doing it in a thoughtful and effective way. DIY forms will not come with legal advice or guidance, nor will they come with any follow-up. Although it might cost a little more up front to hire a competent attorney to create your revocable living trust, think about the thousands of dollars you will save when the time comes by avoiding unnecessary probate costs, minimizing your estate taxes, and protecting your children’s inheritance through thoughtful trust-based planning.
- Depending upon your marital status and the complexity of your needs, you should expect to pay between $3,000 and $5,500 to create a foundational trust-based estate plan. This should include not only your revocable living trust, but the other key aspects of a comprehensive estate plan as well, such as financial powers of attorney, healthcare powers of attorney, and living wills. For families with minor children or special needs family members, a foundational plan should also include a Parent Contingency Plan to address guardian issues for both the short- and long-term. Your fee should also include future follow-up.
By hiring a competent lawyer, you can save thousands of dollars by avoiding unnecessary probate costs, minimizing your estate taxes, and safeguarding your assets from your loved ones’ financial immaturity.
I was headed into major surgery with two little kids, a husband and a business that depended on me. I needed to know that my kids would be taken care of and that my husband wouldn’t have to be the one making all the difficult decisions when it came to a living will. Jodie worked with me and really listened to what I needed to set up to make sure my kids were taken care of in case something happened. She made the process easy and answered all my questions as we went through the process. She has given me a little peace of mind and did it with so much kindness and caring.
~ Margaret Adsit ~
Jodie Gilbert was so helpful in putting together my Special Needs Trust and Living Will. She was very patient in listening to all my questions and then very clearly explaining how to go about getting them resolved. This was all done in a very caring and timely manner. I am so thankful for all the time and expertise that she put into these legal documents. I would highly recommend Jodie for help in any legal matters.
~ Tova ~
Wendi really took the time to answer all of our questions with a mix of humor and seriousness, and diligently followed up. She is on it, and emotionally open to the emotional part of the process. Wendi makes you feel incredibly comfortable during all stages of what can seem like a daunting process. I really trust her, and feel so much more prepared for my future and my children’s futures after going through this work. She provides a great gift to her clients.
~ Mari Brown ~
We had been researching lawyers for years to do our estate plan. We feel we learned more from our first 20 minutes with Wendi than we did in an hour with any of the others. Wendi was really patient with all of our questions and explained everything so well. We have already recommended her to several of our friends.
~ David and Celine Alper ~
We loved working with Temkin Law. We not only gained a better understanding of estates and trusts, but of ourselves as well. We can rest easy knowing that our ‘stuff’ is in order for our child. Doing the Legacy Interview was absolutely priceless. We so enjoyed getting to know Wendi.
~ L.W. and J.W. ~
Wendi made a time-consuming process much easier to complete through her check-lists, templates, and clear instructions for every task. The binder she put together for us is so thorough and makes something overwhelmingly complicated possible to understand and follow. If I need to remember anything about what we did, I know it is in the binder!
~ Mary ~
This truly was the best experience with an attorney ever. Ms. Temkin shines brightly with her highly capable communication skill. She also brings a level of comfort that is authentic and unlike previous attorney contacts. Her personable communication style coupled with her strong knowledge base quickly streamlines the experience into a straight forward efficient session.
~ Judy Roberts ~
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