The world of estate planning offers a wide range of tools you can use to manage your assets and protect them after you’re gone. If you’ve heard of the benefits of revocable living trusts, you may wonder if this is a good tool for your estate. Learn more about how revocable trusts work and when they may be a viable tool for your estate.
If you’re ready to start your estate planning journey, find out how Haygood, Cleveland, Pierce, Thompson & Short can help. Call us at 334-821-3892 to set up a meeting now.
An Overview of Revocable Trusts
People sometimes use the terms “will” and “trust” interchangeably, but they are very different. While a will is a document, a revocable trust is its own entity. Your revocable trust holds ownership of the assets you transfer to it. You still have the freedom to manage them as you see fit, remove them from the trust, or add other assets to the trust. When you pass away, management of the trust passes to a successor trustee.
Who Has Control of Your Assets?
With a revocable trust, you are the one who remains in control of your assets. You are the trustee, which allows you to modify or revoke the trust as you choose. Control of the trust and its assets does not pass to a separate person until you pass away.
You may look into an option known as a shared living trust if you are married. With this option, the living spouse takes over as sole trustee when one spouse passes away. When the second spouse passes away, the role of trustee passes to a third party.
What Happens After Your Death
As soon as you pass away, the role of trustee passes to the person you named as successor trustee. How is this different from a will or other document outlining what you want to happen to your assets? The main difference is that your trust changes hands immediately upon your death.
Without a trust, your estate must go through probate. This means that the court must look at your will and assets, verify ownership, find out if there are debts attached to them, and allow others to come forward with claims. Only after probate can beneficiaries access what has been given to them. Revocable trusts do not have to go through probate, which allows beneficiaries much faster access to the assets granted them by their loved one’s death.
The Benefits of a Revocable Trust
For many, the main benefit of a revocable trust is avoiding probate. Probate can be expensive and time-consuming, especially if your family has never had to navigate this process before.
Your assets could be tied up for months before they finally get dispersed, and during that time, your family may have gone through substantial strife trying to figure out probate. However, Alabama does have a probate shortcut for small estates. If your estate is small enough to qualify, you may not need a revocable trust.
Another key benefit of a revocable trust is that it allows you to access your assets up until your death. Some trusts, including an irrevocable trust, do not have this flexibility. With an irrevocable trust, you lose access to your assets as soon as you transfer them to the trust. If you need those assets to live on, you must rely on the goodwill of your trustee. For those who want to maintain their independence, a revocable trust is often the better idea.
A revocable trust can also protect your privacy. If you want your assets to be kept private after you pass away, a revocable trust is definitely the way to go. When an estate goes through probate, its records are essentially open to the public. People with sizable assets often want privacy for their loved ones, knowing that records of valuable assets may cause people to ask beneficiaries for assistance.
Explore Your Estate Options with Haygood, Cleveland, Pierce, Thompson & Short
There are lots of estate planning solutions available for individuals and couples. The team at Haygood, Cleveland, Pierce, Thompson & Short is here to help you create an estate plan that meets your needs. Just or call us at 334-821-3892 to set up an appointment now.