Estate planning for seniors typically involves several key components. Most people focus on the will (which is important), but you may also need to consider other measures, like creating trusts. Revocable trusts are especially advantageous for some seniors and their families. What is a revocable trust? How can one benefit seniors? This post examines the fundamentals of revocable trusts and outlines their potential advantages.
What is a Revocable Trust?
A trust is a legal structure created to hold, manage, and distribute assets. A revocable trust allows you to transfer assets to the trust’s ownership while maintaining full control. The creator of the trust is the grantor. In most cases, the grantor is also the trustee of a revocable trust. The trust may also have a successor trustee who takes over in the event of the grantor’s death or incapacitation. The successor trustee follows your instructions concerning the management and distribution of assets.
The trust being revocable allows you to change or dissolve the trust while you’re living and of sound mind. The trust becomes irrevocable upon your passing.
Keeping Assets Out of Probate
One of the top reasons for creating a revocable trust is to avoid probate. Many seniors prefer to have their estates avoid probate because the process is time-consuming and costly. It is also a public process, but the probate process typically does not include trust assets. That can ensure privacy, streamline asset distribution, and reduce costs.
Sound Management During Incapacity
Creating a revocable trust can be part of incapacity planning for seniors. If you are ill, have an accident, or are incapacitated for any other reason, the successor trustee can step in to manage the trust. They can handle investments, pay bills, or provide for your care. That ensures a simpler transition during difficult times. It also helps you avoid the need for a court-appointed guardian or conservator.
More Asset Distribution Options
Establishing a revocable trust provides more control and more options for asset distribution upon your death. The grantor can set specific terms, like staggered payments or distribution upon reaching a particular age. These options can be particularly useful if the beneficiary is a minor or lacks financial management skills. You can also include special provisions for individuals with disabilities or unique needs.
Increased Control and Flexibility
Control and flexibility are two of the key advantages of setting up a revocable trust. The grantor maintains complete control during their lifetime. You can change beneficiaries, distribution terms, successor trustees, and more. It is even possible to dissolve the trust entirely. That allows you to adjust the terms of the trust as your circumstances change.
While revocable trusts have many benefits, there are limitations to consider. Revocable trusts do not shield assets from estate taxes or Medicaid. There are also important requirements for drafting trust documents and transferring assets.
Are you interested in creating a revocable trust? The elder law experts at the Scott Law Offices are ready to help. Reach out now to learn more about our estate planning services.
