(Photo: Desert Valley Times) The use of a revocable trust (sometimes referred to as a “living trust” or “family trust”) to plan one’s estate has become very popular. Despite the popularity of the revocable trust, revocable trusts are not without their potential problems. First, it is important to understand that there is no definitive answer as to whether a trust is necessary. Another estate planner explained that asking whether a revocable trust is good or bad is like asking whether a wrench is good or bad. It depends on what you are trying to accomplish. A trust is just an estate planning tool. Whether it is good or bad depends on your needs and desires. Although there are many factors to consider in determining whether a revocable trust is right for you, here are a few of the more significant factors: Avoiding Probate It is true that a properly funded trust avoids probate. If the goal of the client is to avoid probate, it is critical that the trust be properly funded. To “properly fund” a trust, title to all assets and beneficiary designations for insurance policies and retirement accounts must be reviewed. A properly funded trust avoids probate because the owner of the assets (generally termed the trustor, settlor, grantor or trustmaker in the trust document) conveys ownership from him or herself (in his or her individual capacity) to him or herself as trustee of his or her trust. Probate is avoided because for “probate purposes” the deceased […]
(Photo: Desert Valley Times) The use of a revocable trust (sometimes referred to as a “living trust” or “family trust”) to plan one’s estate has become very popular. Despite the popularity of the revocable trust, revocable trusts are not without their potential problems. First, it is important to understand that there is no definitive answer as to whether a trust is necessary. Another estate planner explained that asking whether a revocable trust is good or bad is like asking whether a wrench is good or bad. It depends on what you are trying to accomplish. A trust is just an estate planning tool. Whether it is good or bad depends on your needs and desires. Although there are many factors to consider in determining whether a revocable trust is right for you, here are a few of the more significant factors: Avoiding Probate It is true that a properly funded trust avoids probate. If the goal of the client is to avoid probate, it is critical that the trust be properly funded. To “properly fund” a trust, title to all assets and beneficiary designations for insurance policies and retirement accounts must be reviewed. A properly funded trust avoids probate because the owner of the assets (generally termed the trustor, settlor, grantor or trustmaker in the trust document) conveys ownership from him or herself (in his or her individual capacity) to him or herself as trustee of his or her trust. Probate is avoided because for “probate purposes” the deceased […]
