Why Is a Revocable Trust So Valuable in Estate Planning?

There’s quite a bit that a trust can do to solve big estate planning and tax problems for many families.

As Forbes explains in its recent article, “Revocable Trusts: The Swiss Army Knife Of Financial Planning,” trusts are a critical component of a proper estate plan. There are three parties to a trust: the owner of some property (settler or grantor) turns it over to a trusted person or organization (trustee) under a trust arrangement to hold and manage for the benefit of someone (the beneficiary). A written trust document will spell out the terms of the arrangement.

One of the most useful trusts is a revocable trust (inter vivos) where the grantor creates a trust, funds it, manages it, and has unrestricted rights to the trust assets (corpus). The grantor has the right at any point to revoke the trust, by simply tearing up the document and reclaiming the assets, or perhaps modifying the trust to accomplish other estate planning goals.

After discussing trusts with your attorney, he or she will draft the trust document and re-title property to the trust. The assets transferred to a revocable trust can be reclaimed at any time. The grantor has unrestricted rights to the property. During the life of the grantor, the trust provides protection and management, if and when it’s needed.

Let’s examine the potential lifetime and estate planning benefits that can be incorporated into the trust:

  • Lifetime Benefits. If the grantor is unable or uninterested in managing the trust, the grantor can hire an investment advisor to manage the account or a spouse, child, trusted friend or a trust company to act for the grantor.
  • Incapacity. A spouse, child, trusted friend or trust company can be named to care for and represent the needs of the grantor/beneficiary. The spouse, child, trusted friend or trust company will manage the assets during incapacity, without having to declare the grantor incompetent and petitioning the Court for a guardianship. After the grantor has recovered, he or she can resume the duties as trustee.

A properly funded revocable trust is a great tool for estate planning because it bypasses probate, which can mean considerably less expense, stress and time.

In addition to a trust, please ask the attorneys of Michael T. Huguelet, P.C. about the rest of your estate plan: a will, powers of attorney, medical directives and other considerations.

The law office of Michael T. Huguelet, P.C. would be honored to sit down with you to discuss your needs and develop an estate plan to help you achieve what you want to accomplish.

Reference: Forbes (February 20, 2019) “Revocable Trusts: The Swiss Army Knife Of Financial Planning”