A revocable living trust may be an ideal estate planning option for you.
When you think of estate planning, you most likely think of a last will and testament.
Wills are foundational to estate planning, to include nominating guardians for minor children and distributing assets.
This is true.
Yet, you should not think having a will is your only option.
For some folks a will is too much legal medicine.
You read that right, so stop rubbing your eyes.
Even though that notion would appear to be "legal heresy" coming from the keyboard of an estate planning attorney, not everyone needs a will.
I am encountering an increasing number of baby boomers who are content with arranging all of their assets (sans tangible personal property) to pass directly by beneficiary designations under the very generous non-probate transfer laws of Kansas and Missouri.
All that is needed to transfer the assets so arranged at death - without probate - is the death certificates of the owners.
Even though this approach carries some degree of risk (e.g., what if your designated beneficiary predeceases leaving behind minor children?), more and more clients are willing to knowingly accept such risks.
What about the space for a revocable living trust in an estate plan?
According to a recent Forbes article titled “Revocable Trusts And Why Should You Consider One,” your estate and family dynamics may require a revocable living trust.
It a trust created during your lifetime.
A testamentary trust is created at your death through provisions in your will.
The living trust has many of the same functions of a will.
It outlines instructions for dispersing assets.
Rather than naming an executor for a trust, you will name successor and perhaps co-trustees.
While you are alive, you control the assets within the trust.
How do you move assets into and out of the trust?
You simply retitle them.
Does this impact your income or estate taxes?
You can fund your current lifestyle as necessary using the trust.
Why would you create a trust?
If you have extensive and complex assets, it allows these to pass outside of probate, especially if located in another state.
Probate is a matter of public record, so a trust will keep your affairs more private.
Does having a trust mean you do not need a will?
You will want at a “pour-over will.”
What does this do?
It transfers assets not titled to your trust now by transferring them to your trust via probate at your death.
In addition, you need a will to nominate guardians for any minor children.
While you are at it, make sure you have arranged for "designated beneficiaries" of your life insurance and retirement plans.
These beneficiaries may be your trust or specific individuals.
The revocable living trust becomes "irrevocable" at your death.
You are no longer alive to revoke it and neither can anyone else.
A revocable living trust can also benefit you while alive.
If you become incapacitated, your revocable living trust can provide special instructions for your financial needs and care.
Work with an experienced estate planning attorney to determine whether a revocable living trust would provide a wise foundation upon which to build your estate plan.
Reference: Forbes (March 11, 2019) “Revocable Trusts And Why Should You Consider One”