Have you been wondering if you should set up a revocable trust? If you ask around, you may get different answers.
Let’s take a quick look at who would typically benefit from this estate planning vehicle and review some facts about them.
Do you need a revocable trust?
As with most financial products, the answer is “it depends.” Some estate planners think everyone should have one; others say it’s not necessary.
In general, a revocable trust is beneficial for:
- Business owners
- People who own homes in multiple states
- People who prioritize privacy
- People who want to avoid probate.
If your financial situation is simpler, a revocable trust may be overkill.
Also, a revocable trust is not a substitute for a will. Even if you set up a revocable trust, you should still have a separate will that covers your other assets and belongings.
Now, let’s look at five more important facts about revocable trusts:
- A revocable trust will not allow you to avoid estate tax. By its very nature, a revocable trust lets you keep control over your assets. That means that, in Uncle Sam’s eyes, your assets remain in your estate. If you want to avoid estate tax, investigate an irrevocable trust instead.
- Assets in a revocable trust do not go through the probate process. They are passed right to your beneficiaries. This is the key difference between a revocable trust and a will.
- You may name yourself as the trustee of your revocable trust, which allows you to retain control over your assets. If you are concerned about the fate of your trust in the event of becoming incapacitated (or dying), you may also choose to name a successor trustee–or the person who will take over your trust for you.
- A revocable trust allows you to keep details of your assets under wraps. Unlike a will, which is public record after your death, a revocable trust is a private document.
- The assets in a revocable trust are still subject to creditors even if they are not held in your name. If you’re looking to protect your assets from creditors (or from lawsuits), consider establishing an irrevocable trust.
If you think a revocable trust makes sense for you and would like to discuss your options, one of our advisors is here to help. Click here to set up a no-cost, no-obligation meeting.