Pros and Cons of Revocable Living Trusts

When planning your estate, you want to make sure your assets are protected and your wishes are followed. One popular tool for this is a revocable living trust. It offers many benefits but also can have some downsides. Moreover, there is a wide range of quality when looking at revocable trust sources. Be sure to get the highest quality available and do not settle for generic "one-size-fits-all" estate plans.

What Is a Revocable Living Trust?

A revocable living trust is a legal document that holds your assets during your lifetime and specifies how they should be managed and distributed after you pass away. You create the trust, transfer ownership of your assets into it, and name a trustee to manage those assets when you are unable. Because it’s revocable, you can change or cancel it anytime while you’re alive.

This type of trust is often used to avoid probate, keep your affairs private, and plan for incapacity. However, that just what the generic basic trusts offer. A quality top-tier trust can provide protections for the inheritance. This is what separates the good trusts from the bad ones.

Revocable Living Trusts Pros and Cons

Advantages:

Avoiding Probate

One of the biggest reasons people choose a revocable living trust is to avoid probate. Probate is the court process that validates a will and oversees the distribution of assets. It can be slow, costly, and public. Read our post about probate here.

With a revocable living trust, your assets pass directly to your beneficiaries without going through probate. This means your heirs can get their inheritance faster and with less hassle.

Privacy Protection

Probate records are public, so anyone can see what you owned and who inherits it. A revocable living trust keeps your estate details private because it doesn’t go through probate court. The trust document can stay private and only very basic information has to be provided to institutions identifying the trust. A common overlooked benefit is the privacy given to beneficiaries. Read more about this privacy here.

This can be important if you want to protect your family’s financial information or avoid unwanted attention.

Flexibility and Control

Since the trust is revocable, you can change it anytime. You can add or remove assets, change beneficiaries, or even cancel the trust if your situation changes.

You also name a trustee to manage the trust when you are unable. Often, you serve as the trustee while you’re alive, keeping control over your assets. If you become incapacitated, the successor trustee steps immediately in without court involvement.

Planning for Incapacity

A revocable living trust includes instructions for managing your assets if you become unable to do so yourself. This avoids the need for a court-appointed guardian or conservator, which can be expensive and time-consuming.

Potential for Faster Asset Distribution

Because the trust avoids probate, your beneficiaries can receive their inheritance more quickly. This can be a relief during a difficult time.

Protection of the Inheritance

Many trusts contain what is known as a "spendthrift" provision essentially stating that the inheritance will not be available for the claims of the beneficiary's creditors.

While this provision, if included, can be effective after the trust creator dies but BEFORE the beneficiary receives the inheritance; it almost always fails to protect AFTER the beneficiary has received the inheritance, even if the monies are still held in the trust.

Protecting the inheritance during the short trust settlement period is one thing; protecting the inheritance for the lifetime of the beneficiary is another. CompleteMyEstatePlan makes sure your trust beneficiaries have all the protections available for their entire life.

CompleteMyEstatePlan's trusts contain protective provisions that give the maximum protection both BEFORE and AFTER the beneficiary receives his or her share of the trust estate - making sure that the inheritance goes to the beneficiaries as you intended. This post-distribution protection is but one of many ways we separate ourselves from the competition - top tier estate plans at the lowest online prices.

Disadvantages

Initial Setup Costs and Complexity

Creating a revocable living trust can be more expensive and complex than making a simple will. You may need help to draft the trust properly and transfer assets into it. CompleteMyEstatePlan's free customer service helps you every step of the way and also assist in the settling of your estate for your heirs.

If you don’t fund the trust correctly by moving assets into it, the benefits may be lost.

Ongoing Management

You must actively manage the trust by transferring assets into it and updating it as needed. This means new assets must be "linked" to the trust in some shape or form. CompeteMyEstatePlan's lifetime customer assistance is ready to help you with questions you might have. Remember, if you forget to transfer new assets into the trust, those assets may still go through probate.

No Protection from Creditors

Because you retain control over the trust assets, they are not protected from your creditors. If you face lawsuits or debts, those assets can be claimed. However, as mentioned above, a quality trust from CompleteMyEstatePlan can offer protections for your heirs.

As you can see, when it comes to revocable living trusts pros and cons, it is substantially in favor of the advantages.

When a Revocable Living Trust Makes Sense

If you want to protect your heirs inheritance, avoid probate, keep your estate private, and plan for incapacity, a revocable living trust from CompleteMyEstatePlan is you best choice. It works if you have significant assets, own property in multiple states, or want to protect your family from court delays.

It’s also helpful if you want to control how your assets are managed after you’re gone, such as setting conditions for inheritance.

Tips for Setting Up a Revocable Living Trust

• Transfer ownership of your assets into the trust. This includes bank accounts, real estate, and investments.

  
  

• Name a reliable successor trustee who can manage the trust if you become incapacitated or pass away.

  
  

• Review and update your trust regularly, especially after major life changes like marriage, divorce, or the birth of a child. CompleteMyEstatePlan offers 1 year of free updates and lifetime service plans to help you every step of the way.

Final Thoughts on Revocable Living Trusts

A revocable living trust offers clear benefits like avoiding probate, protecting privacy, and planning for incapacity. But it also requires effort to set up and manage, and it doesn’t provide tax savings or creditor protection.

CompleteMyEstatePlan can make creating a top quality revocable living trust easier and more accessible. We help you build a solid estate plan without breaking the bank.

If you want to protect your family and ensure your wishes are followed smoothly, a revocable living trust is worth considering. Take the time to understand how it works and choose the right tools to create one that fits your situation.

Your estate plan is one of the most important documents you’ll ever create. Make it count. Get started today.