THE ATTORNEY'S CORNER: BENEFITS OF A REVOCABLE TRUST

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“Articles Concerning Trusts, Wills, Probate, Family Law & more”

By Stephen C. Ross, Esq.

October 10, 2014 (San Diego County) – The primary benefit of a revocable trust is often considered to be avoidance of probate. Although it is true assets held in trust avoid probate, there are several other benefits of a revocable trust to consider. The following are trust benefits that may, or may not, be important to you.

1. Asset Management if Incapacitated. You are typically the trustee of your revocable trust while living and competent. However, the successor trustee named in your trust can take over management of your property should you become incapacitated or resign as trustee for any reason. The transfer of management takes place without court supervision and usually without any disruption to the management of your property. Only property actually transferred to the trust can be managed by the successor trustee.

2. Managing Property for a Beneficiary. The beneficiary you designate to receive your property may not be able to handle an inheritance. For example, he or she may be a minor, not good at money management, in a questionable marriage, in bankruptcy or incapacitated. A revocable trust allows you to pass your property to such a beneficiary while having the trustee manage it for them until they are ready to receive it.

3. Reducing or Eliminating Estate Taxes. The federal estate tax exemption in 2014 is $5,340,000.00 for a single person and $10,680,000.00 for a married couple. Therefore, most people will not receive an estate tax benefit from a revocable trust. However, a married couple with a large estate may reduce or eliminate estate taxes with an appropriately prepared revocable trust. Discuss the options with an experienced estate planning attorney prior to preparing the trust. A single person may be able to reduce or eliminate estate taxes by reducing the value of the assets he or she owns at death.

4. Avoiding Probate. Property in a revocable trust is exempt from probate. However, the trustee is still required to provide notice to the beneficiaries, collect trust property, pay creditors and distribute any remaining property to the designated beneficiaries. The trustee’s fee and attorney’s fee will probably have to be paid from trust property. Typically, the trustee of a revocable trust is able to distribute trust property more quickly and at less cost than is possible with probate.

5. Preventing a Will Contest. Although revocable trusts can be contested, it is usually a much more time consuming and expensive process. The proof necessary to successfully contest a trust is much more difficult to establish than the proof necessary to contest a will. Will contests are often not successful, but the best way to avoid the threat is to establish a revocable trust.

6. Privacy. A revocable trust is a better option than probate for those wishing to keep their affairs private. Probate documents, including the will, are public documents available for anyone to view. Revocable trusts are private documents and do not get filed with the probate court. No one can see the trust unless the person who created it or the trustee permits it.

Stephen represents estate planning, trust, will, probate, trust administration, business formation, stepparent adoption and family law matters. He conducts estate planning and probate seminars throughout San Diego County. For more information or to schedule a seminar contact Stephen at (619) 795-8524, stephen@stephenrosslaw.com or visit www.stephenrosslaw.com.

Disclaimer: Information contained in this article is believed to be accurate. However, you should seek professional legal advice before relying on the information. Stephen is not licensed to practice law in any state other than California and “The Attorney’s Corner” is not intended as an advertisement.

Visiting Stephen’s website does not create an attorney-client relationship and confidential information is not protected until a written agreement is signed.


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Comments

A Living Trust

My dad set up a Living Trust. He had accounts in several banks, three vehicles, a house and personal items of some value. Kris the Sis was the Executor of his estate and of course we were very stressed when he passed but the trust allowed us to combine and then divide his assets. Talking about money was always a taboo in my family and I was surprised at the value of dad's estate, but it changed our lives. Thanks, Eddie!