A revocable trust can provide several benefits as a part of an estate plan. A revocable trust that you create as the grantor can be controlled during your lifetime with you as the trustee. You retain legal title to the assets in the trust and, the trust can be revoked or amended during your lifetime. The following are three of the benefits.
You gain more flexibility when you plan for your estate. The trust allows you the flexibility to add or remove assets during your lifetime. You can also make changes to income beneficiaries or cancel the trust altogether. Be sure to exercise caution before creating, amending, or canceling a trust.
A revocable trust avoids probate and limits the costs that your estate and heirs will generally have to pay. Probate is the court proceeding in which the executor named in the last will and testament petitions the court to declare the document as valid and allows the executor to collect and distribute assets according to the terms set out in the will.
With a revocable trust, the trustee can more efficiently distribute the assets. Moreover, the cost savings can be significant because the trust avoids the paperwork, court intervention, hearings, and legal filings that make up the probate process.
Also, because probate of a revocable trust is generally unnecessary, the trustee can keep the terms of the trust private rather than having it become a part of the public court record.
The trust can be used as a beneficiary for certain assets that are distributed outside of a will. These are assets that do not require probate, such as retirement accounts, life insurance, and certain brokerage accounts with payment upon death to a named beneficiary (along with jointly-owned accounts). With care and proper advice, an individual can name the trust the beneficiary for some of these assets. When the assets are distributed to the trust, the trustee then disperses them according to the terms of the trust.
You should discuss the merits of a revocable trust for your circumstances with an estate attorney.