A revocable trust is sometimes called a “living trust” and is a helpful estate planning document. It’s primarily used to avoid the costs and hassles of probate, preserve privacy, and prepare your estate for a smoother transition after you die. There are many reasons you may need a revocable trust.
Who Needs a Trust?
A trust can be irrevocable or revocable. Once signed, an irrevocable trust can’t be changed. For this reason, most people prefer a revocable trust for its flexibility, since you can change or end it at any time.
No matter how rich or poor you think you are, you may need a revocable trust if you want to:
- Avoid probate. Probate isn’t as scary or common as you’d think, but it does have a bad reputation. It’s the process when a judge decides how to distribute your assets. Since it goes through the court system, it’s a matter of public record and can include details about your assets. On the other hand, a revocable trust is private.
- Keep family assets in your family. Divorce is common. You don’t want your child’s spouse to get half of your estate should they later divorce.
- Protect your kids. A revocable trust can hold inheritance money for minor children until a specific age. If your child is bad with money, you can also avoid a lump-sum inheritance with a trust.
Revocable Trusts: Five Surprising Facts
- A revocable trust does not replace a will, but it can include one. For example, you can’t name your children’s guardians in a trust.
- A revocable trust may cost more than a will initially, but can save grieving heirs money and time by avoiding the probate process.
- Revocable trusts only keep property out of probate when named in the trust. You also need to update your titles and deeds to reflect the name of your trust. As your assets change, you’ll need to update your documents.
- The Federal Deposit Insurance Corporation (FDIC) insures bank balances up to $250,000. However, adding a primary beneficiary to the account changes things. According to the FDIC, “In general, the owner of a revocable trust account is insured up to $250,000 per each primary beneficiary.”
- While you may save money avoiding probate, you can’t “get out of paying taxes” with a revocable trust.
Arizona Estate Planning
Your personal and financial circumstances are unique. An experienced estate planning attorney can help you determine what documents are necessary for your situation.
Arizona estate planning is not only for the rich and famous. It’s an affordable way to avoid complicated legal problems for your family. Most importantly, an effective estate plan can save your loved ones from the additional strain and anguish associated with your death. Learn more about the power of a revocable trust and other estate planning tools. Contact Ogborne Law to schedule your estate planning session.
Engaging with an attorney to protect your family is never an easy step. Whether you need to protect your family from the unthinkable or restructure your family through collaborative divorce, we’re here to help. When you’re ready to schedule a consultation with Michelle Ogborne, please visit the scheduling page to get started.