Living Revocable Trust
Why You Need One!
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 trust.
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:
- This will isn’t real
- Dad was incompetent when he made out the will
- Dad forgot me in the will – it was a mistake,
- 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.
Avoid Probate in All States
You can easily end up owning property in more than one state, without the living revocable trust, there would be probate in every state in which you own your property. Probate courts only have jurisdiction over the property in the state where they are located. Therefore, a different probate proceeding must be conducted in every state where the deceased owned property.
The probate in the state where the deceased was a resident is called the primary probate, and the probates in other states are called ancillary probates. All of the probates are avoided when the property is brought together under the ownership umbrella of the living revocable trust, only one trust is required. It simply owns property in more the one state in the same way that you can own property in more than one state.
After all, a revocable living trust can be a great way to avoid the time and expense of opening an estate. If your estate is worth more than $250,000, you need to look closely at a Revocable Living Trust because all the other reasons listed above apply to it. If you start a revised trust and avoid the probate process, this can save you and your loved one’s time, money, and, above all, your love.
It is true that the property in a revocable living trust does not forfeit through estate when you die. This means that with all your assets in your Revocable Living Trust you can avoid inheritance tax after your death.
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.
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