LIVING REVOCABLE TRUST:
(WHY YOU NEED ONE?))
What is a Living Revocable Trust?
Establishing a living revocable trust offers numerous advantages when it comes to estate planning. It allows you to maintain control and flexibility over your assets, avoid probate, maintain privacy, plan for incapacity, streamline asset management, and enhance creditor protection and asset preservation.
A living revocable trust has numerous advantages that everyone can take advantage of, and it also has some subtle advantages that can really help in certain circumstances. Obviously, it will save a lot of money possibly thousands of dollars in probate costs, and it moves that money directly to your loved ones. Lawyers charge more to prepare living revocable trusts than they do simple wills, but the real cost of the will also includes the cost of probating the assets which are subject to the will.
When you look at the big picture, a living revocable trust is relatively inexpensive. A living revocable trust is easy to establish, and it facilitates the smooth, quick transfer of power and property at your death or incompetency. And of course, avoiding probate and being able to control your wealth, both during your life and after you die, are the big advantages of living revocable trusts. There are also many other significant advantages you can obtain by using your
A revocable living trust is a popular estate planning tool that allows you to control how your property is treated during your life and after death. This is where you invest your assets during your lifetime so that your heirs can inherit them after your death.
First, a revocable trust allows you to have a trustee with financial expertise to manage your assets throughout your life. Although you are now in charge of all your financial affairs, there is no legal reason why you cannot be the trustee of your own Living Trust.
Second, to finance your living trust and avoid Probate, all your assets must be transferred to the trust fund. Living trusts do not have to go through Probate because the title has already been transferred to your trust by you.
The Trust Protects your Privacy.
Everyone believes the right to privacy is a freedom guaranteed by the United State Constitution. Protecting your privacy is becoming increasingly more difficult. Trust has traditionally been used to protect the privacy of the super-wealthy. A living revocable trust very effectively protects your privacy. Because assets owned by the trust are not exposed to probate, they do not have to be inventoried for the courts.
Incompetency- Trusts Save Money and Heartache
The living revocable trust is a lifesaver when Dad or Mom becomes incompetent. It can also be a lifesaver when you become incompetent. When you become incompetent, that doesn’t mean you will be hauled off the loony bin, it just means that you can’t handle your own business affairs. The law allows you to use your trust and designate the conditions under which control will be passed to your designated “ successor” trustee.
Trust Can Avoid the Will Contest Problems Because your living revocable trust is a very flexible legal tool, it can be changed any time you want. It is also a very stable legal tool. Maybe it is just because there are far fewer trusts than there are wills, but you don’t see the challenges to trusts that you see brought against wills. The common challenges will include:
1. This will isn’t real
2. Dad was incompetent when he made out the will
3. Dad forgot me in the will – it was a mistake,
4. The will doesn’t square with letters, statements, and other evidence showing Dad’s intentions.
The Impact of Probate
The court fees and attorney fees add up fast, there are also personal representative fees, appraiser fees, and other fees that all eat away at the estate. Exact numbers on the total cost of probate don’t really exist. I think it is safe to say that the minimum cost is around 5% of the gross value of the estate, and it is certainly possible to 10% or more of the gross estate expended in the probate process. In some situations, the attorney’s fees and other probate fees may be set by statute. The attorney can ask for at least the statutory amount, and the request will almost always be granted.
Probate Kills Businesses
The death of the business commander-in-chief is often a fatal blow to the business. This is especially true for a small business. Leadership, creativity, and vision often die with the owner. Even if someone steps in with the same qualities, the business will struggle. Small business owners face a real dilemma because the spouse shouldn’t be involved in the business as an officer, director, or partner, for asset (lawsuit) protection purposes. But the spouse is often the logical person to take over the family business. Without careful planning, if the spouse isn’t intimately involved, the business may well disintegrate when the owner dies.
The business will probably be drawn into the probate, in fact, most will grant the personal representative the power to operate a business, because it isn’t uncommon to have the business end up in probate. After all, it’s probably the major asset the owner has when he or she dies.
Avoiding Probate and Maintaining Privacy
Probate is the legal process through which a court validates a will and oversees the distribution of assets. One significant advantage of a living revocable trust is that it allows you to avoid probate entirely. By placing your assets in a trust, you ensure that they will be distributed according to your instructions without the need for court intervention, which can be time-consuming and costly.
Additionally, a living revocable trust offers greater privacy compared to a will. Unlike a will, which becomes a matter of public record during probate, a trust allows for the private transfer of assets, maintaining confidentiality and protecting sensitive financial information.
Streamlining Asset Management and Avoiding Multiple Probates
If you own property in multiple states, a living revocable trust can be particularly beneficial. By transferring your out-of-state assets into the trust, you can avoid the need for multiple probate proceedings in each jurisdiction. This simplifies the management and distribution of your assets, saving time, costs, and potential legal complexities for your loved ones after your passing.
Disability and Incapacity Planning
Another compelling reason to establish a living revocable trust is to plan for potential periods of disability or incapacity. In the event that you become unable to manage your affairs, either temporarily or permanently, the successor trustee named in your trust document can seamlessly step in and handle your financial matters according to your wishes. This ensures that your assets are protected, bills are paid, and your well-being is maintained without the need for court-appointed guardianship.
Income Taxes No Problem, Trusts Help
You do not have to file trust income tax returns in the name of your living revocable trust, as long as the trust is revocable and you and/or your spouse are the trustee(S). that’s the good news. The bad news is, you still have to pay your income taxes. You will file your own 1040 form just as you always have. The government doesn’t even want to know that you have a living revocable trust.
They reason that since your trust is revocable, you can get the property back at any time. It was your property before you put it into the trust, and you can get it back or use it however you want. Therefore, it must be “yours.” So, the IRS will tax all of the income just as they did before you got your living revocable trust. Whenever anyone asks for a tax I.D. number for your living revocable trust, just give them your social security number.
Enhanced Creditor Protection and Asset Preservation
A living revocable trust can provide an additional layer of creditor protection for your assets. Since the trust owns the assets, they are shielded from potential creditors’ claims. This protection can be especially valuable in situations where you engage in business ventures or face potential liability risks.
Furthermore, a living revocable trust can help preserve your assets for future generations. You can establish provisions within the trust to protect and preserve your wealth, ensuring that it is used responsibly and distributed according to your wishes over time.
Living Revocable Trust vs. Will: The Showdown
Both instruments serve to transfer assets, but they do so differently. A Living Revocable Trust is effective during your lifetime and beyond, offers incapacity planning, maintains privacy, and avoids probate. A will, on the other hand, only takes effect after your death and requires probate, but allows appointing guardians for minor children, something a trust doesn’t do.
How Islamic Wills Trust Service Can Help
An Islamic Wills Trust Service, like a seasoned guide in a complex maze, can lead you through the process of creating Shari’ah-compliant Islamic Wills and Trusts. Here’s how they can assist:
Understanding Your Needs
These services take the time to understand your unique situation, your assets, your beneficiaries, and your wishes. They make sure your will and trust align with your personal beliefs and circumstances.
Navigating Shari’ah and Local Laws
Given their expertise in both Islamic and local laws, these services can help ensure your will and trust meet all legal requirements. They can balance Shari’ah compliance with local law compatibility, thus avoiding any potential legal snags.
Crafting Customized Solutions
Each person’s financial situation and desires are different, and Islamic Wills Trust Services get this. They can tailor solutions to suit your specific needs, ensuring both your Islamic Will and Trust reflect your wishes precisely.
Providing Ongoing Support
Once your will and trust are established, these services don’t just walk away. They provide ongoing support, helping you update your documents as your circumstances change. They’re there to guide you every step of the way, from inception to execution.
In a nutshell, an Islamic Wills Trust Service is like a lighthouse guiding your ship through the sometimes stormy sea of Islamic estate planning. With their help, you can sail smoothly towards a future where your wealth serves your loved ones and your faith in the best possible way.
Frequently Asked Questions About Living Revocable Trusts
Q. Is a Living Revocable Trust only for the wealthy?
No, anyone seeking to avoid probate, maintain privacy, and plan for incapacity can benefit from a Living Revocable Trust.
Q. Can I change the terms of a Living Revocable Trust?
Yes, as the name suggests, it’s revocable, meaning you can modify or terminate it during your lifetime.
Q. Do I lose control over my assets in a Living Revocable Trust?
No, as the trustor and usually the initial trustee, you maintain full control over your assets.
Q: Can I be the trustee of my own Living Revocable Trust?
Yes, indeed! You can be the trustee of your own trust and manage your assets as you see fit. This way, you retain full control over your financial affairs.
Q: What happens if I want to make changes to my Living Revocable Trust?
Fear not! The ‘Revocable’ nature of the trust allows you to modify, amend, or even revoke the trust entirely. You have the flexibility to adapt it to your changing circumstances.
Q: Will a Living Revocable Trust protect my assets from creditors?
Unfortunately, no. A Living Revocable Trust doesn’t provide creditor protection. If asset protection is a concern, you may want to explore other options like an irrevocable trust.
Q: Is a Living Revocable Trust the same as a will?
Not exactly. While both serve as estate planning tools, they have significant differences. A will goes through probate, becomes a public record, and takes effect after your passing, while a Living Revocable Trust is active during your lifetime and bypasses probate.
Q: Do I still need a will if I have a Living Revocable Trust?
Yes, it’s advisable to have a pour-over will in conjunction with your Living Revocable Trust. The pour-over will catches any assets not transferred to the trust during your lifetime and ensures they are distributed according to your wishes.
Q: Can a Living Revocable Trust help minimize estate taxes?
No, a Living Revocable Trust doesn’t offer estate tax savings. If minimizing estate taxes is a concern, you should consult with an estate planning professional for strategies like creating an irrevocable trust or utilizing other tax planning tools.
If you would like to discuss making an Islamic will or Islamic Trust, please complete our free online inquiry form or call us to consult whether an Islamic will or Islamic Trust is suitable for you, you can fill out our free online inquiry form or call us at 1855-559-4557.