Tuesday, February 2, 2010

Today's Probate Answers

Will I Still Have Control Over My Property If I Establish a Revocable Living Trust?

A Revocable Living Trust is one of the most flexible estate planning tools available. It can be the foundation on which an individual's financial and estate plans are built. It offers many benefits and gives you control over the management and distribution of your assets during your lifetime and after your death.

What Is a Revocable Living Trust?

A Trust is a legal entity that owns assets. It involves an agreement between you, as grantor, a Trustee, and beneficiaries. When you set up a Revocable Living Trust, you transfer assets to a Trustee to be held for the benefit of one or more beneficiaries. The Trustee invests, manages, and/or distributes the Trust's assets based on the grantor's instructions as set forth in the Trust document. The Trustee can be an individual or an institution such as a trust company or bank.
Often, you name yourself the beneficiary for your lifetime. By including testamentary provisions, the Trust can continue after your lifetime for the benefit of your spouse and/or children. This also helps to avoid the cost, time, and unwanted publicity of the Probate process.

How Does a Revocable Living Trust Give You Control?

You can be the grantor, trustee, and beneficiary of the Trust during your lifetime. By assuming all three roles, you maintain control over your assets during your lifetime. Not only that, but you, as the grantor, reserve the right in the Trust document to amend or revoke the Trust at any time during your lifetime. This enables you to revise the Trust (or even terminate the Trust) to take into account any change of circumstances such as marriage, divorce, death, disability or even a "change of mind." It also affords you the peace of mind that you can "undo" what you have done.

To fund your Revocable Living Trust, you will need to re-title assets to transfer them into the Trust. You do that by changing the name on assets to the name of the Trustee and re-registering securities into the Trustee's name. All current and future assets, such as bank accounts, titles, deeds, stocks, and mutual funds, should be in the Trustee's name, as Trustee, for the benefit of the Trust. Some assets, such as IRAs and Qualified plans, should not be transferred into the Trust, however, the Trust may be named as a beneficiary of those plans. It is important to speak with your Estate Planning Attorney, and tax advisor regarding re-titling of assets and proper beneficiary designations.

Once this is done, legally, you no longer own any of the assets in your Revocable Living Trust in your individual name. The Trustee, perhaps you, own them in the capacity as Trustee of the Trust. Your Trust now owns your assets. But, as the Trustee, you maintain complete control. While you are alive and mentally competent, you have complete control over your property. You can buy, sell, improve, spend, change investments, or give away property just as you would without a Trust.
Upon your death, the Trust becomes irrevocable so that no one can change your testamentary wishes. For married couples, the surviving spouse still has total control over his or her share of property after its transfer to the survivor’s Trust, and the Trust becomes irrevocable only as to the deceased spouse’s share.

For more information regarding Trusts or Probate, please visit our website,