Planning your estate probably feels like something you should do, but that you may not fully understand or be all that excited about. And with lots of words like “revocable” and “irrevocable trust”, “minor trusts”, “advance directive“, “living will“, etc. floating around the subject, it can start to feel a little over your head.
All those terms might sound a little confusing, but they don’t have to be. Let us clear the water in at least one of those areas. Specifically, what is a revocable trust, do you need one, and why?
What is a Revocable Trust?
When you decide to plan your estate, your attorney will create many documents to help protect you and your heirs before and after your death.
One of these documents is called a revocable trust, also known as a revocable living trust. It’s a written document signed by you – the person establishing the trust, and a notary.
In it, you will list all property (personal and real estate) you own, and indicate who will receive the property after your death. You will also define a designated trustee, or the person who will administer these wishes once you pass away.
See a legal definition of “what is a revocable trust” here:
Your revocable trust is put into the control of a trustee, who will hold and manage the assets and distribute them to the beneficiaries at the time of your death.
What is the Difference Between a Will and a Revocable Living Trust?
“But wait,” you might wonder, “Isn’t that what a will does?”
Well, yes and no. The two documents are similar, but they have some key differences, and both are necessary when you’re planning your estate:
A will is a legal document that lays out your wishes for how you want your property distributed and who will care for your minor children. It’s also a public document that anyone can access.
Revocable Living Trust
A revocable living trust assigns (retitles) your property to a person you designate as a trustee while you are still alive to help avoid probate administration once you die, whereas a will only cover what will happen after your death. (This is highly important! Probate nightmares can happen no matter the size of your estate.)
It is called “revocable” because it can be updated by you during your lifetime as your circumstances or wishes change. Someone you indicate as a beneficiary may die themselves, or you may divorce and remarry and wish to exclude or include this person as a beneficiary.
Also note that unlike a will, a revocable trust is a private document and is not part of the public record.
It’s important to keep in mind that not every asset should be included in a revocable living trust.
Bank and retirement accounts and life insurance policies will generally pass directly to your beneficiaries, but there are exceptions, as with guardianship. A revocable trust should be accompanied by a Last Will and Testament.
Your trust becomes an “irrevocable” trust after you die, meaning no further changes can be made by anyone else.
What is the Advantage of a Revocable Trust?
A revocable trust is a good choice for people who are in ill or declining health and want to think ahead to avoid any inheritance issues after their death. Your beneficiaries will receive their inheritances much faster than from a will.
A revocable trust can also provide management instructions for inheritance allowances and real estate holdings for minor children until they become of legal age.
Related: What is a Revocable Trust?
A Revocable Trust Is Part Of Estate Planning
A revocable trust provides more security and options and should be part of any good estate plan.
Want to better understand what a revocable trust is?
The Law Office of Joshua E. Hummer is conveniently located to serve families and individuals in Winchester, Northern Virginia and the Northern Shenandoah Valley. Please take a moment and contact us to schedule your consultation.