A revocable trust relates to a trust agreement in which the grantor of the trust possesses the power to modify the terms of the trust agreement or completely revoke it. They are more commonly known as revocable living trusts, and the grantor maintains absolute control over the trust agreement. Revocable trusts are more commonly used to avoid probate on assets owned by the grantor at his death as the trust passes on to the beneficiary named by the grantor, to manage the assets of the grantor for the benefit of one or more beneficiaries named by the grantor and avoid, reduce or totally eliminate any tax that may apply on those assets on his death normally if they weren’t placed in the trust fund. If in any ambiguity a consultation with a Trust attorney Los Angeles or a Living trust attorney Los Angeles is recommended.
Reasons For Setting Up A Revocable Trust
Advantages of Revocable Trust
- One major reason for setting up a revocable trust is that it enables the grantor in continuing to have control over his assets placed in the trust whether he becomes disabled, incapacitated, or declines in health.
- Another reason is that you get to minimize the taxes that normally would accrue from maintaining those estate holdings and assets placed in the trust.
- Assets held in a revocable trust are not counted as assets owned by the grantor and so cannot be involved in any probate cases upon the death of the grantor. So a revocable trust keeps assets from being probated.
Having helped a lot of clients down here as a Revocable Trust Attorney or Revocable living trust attorney in Los Angeles and San Fernando Valley California, I can confidently tell you that the revocable trust is the most popular of all the types of trusts available, and this is due to some of the advantages it has over the other kinds of trusts. These include:
Disadvantages of Revocable Trust
- Flexible nature: The flexible nature of revocable trust agreements is one of the reasons why most individuals decide to enter into it. It gives them absolute control over all assets placed in the trust with the exclusive right to edit, modify, change or entirely revoke the terms of the agreement. Also, in a revocable trust, the grantor can also be the trustee in charge of the trust, but it is not so in an irrevocable trust.
- Elimination of Probate on certain assets: The term probate is used to define a legal process by which the will of a dead person is proven in court, and accepted as a true and valid document, and the genuine last testament of the deceased individual. Due to the hassles involved in probate cases, entering into a revocable trust agreement ensures that upon the death of the trust grantor, all assets placed in the revocable trust will not be subjected to probate. Therefore, the cost involved in the probate process is completely eliminated, and some substantial amount of money is saved.
- Ensures continuity: Creating a revocable trust ensures continuity in the management of all assets placed in the trust by the grantor in the case that the grantor becomes incapacitated or disabled. The trustee in charge of the assets in the trust continues to handle these assets on behalf of the grantor.
- Income and Assets are distributed more efficiently: Due to the fact that assets and incomes placed in a revocable trusts are not liable to probate processes, these assets can be more easily and efficiently distributed to the beneficiaries named in the trust agreement document.
- Personal Privacy is assured: A will becomes a public document at the death of the testator due to the probate process, but in a revocable trust, the contents, terms and conditions of the trust remain private even after the death of the grantor.
While having a revocable trust could be advantageous in that it helps you eliminate probate on all assets included in the trust, as your experienced Revocable Trust Attorney in Los Angeles and San Fernando Valley California,
I always make my clients understand that there are still some disadvantages that could arise from entering into a revocable trust agreement. These disadvantages include:
Setting Up A Revocable Trust
- It doesn’t protect assets from creditors: Unfortunately, this is a painful truth. Whatever assets that have been placed in the revocable trust can still be claimed by your creditors who wish to collect their debts from you in the form of whatever assets they can lay their hands on.
- Property Re-registration: Any assets or property that the grantor of a revocable trust wishes to place in an irrevocable trust has to be re-registered in the name of the trust and the process involved in doing this could be burdensome and hectic and also may involve certain costs.
- Taxes are still charged to the assets in the trust: In a revocable trust, it is assumed that assets that have been placed in the trust are still owned by the grantor, so taxes, both income and estate, are still charged to the grantor on any assets in the trust unlike with irrevocable trust where no taxes are charged.
Revocable trusts are trust agreements that are quite easy to set up. Before a revocable trust can be set up, some things have to be put in place. First of all, the grantor has to decide which of his/her assets he/she would want to include in the revocable trust. Assets that can be placed in the trust may include cash, vehicles, jewelries, real estates, stocks and securities owned by the grantor. The grantor, in a revocable trust, is usually the trustee in charge of the trust, so as a grantor, he/she can decide to name another person as a successor trustee in the event that he/she becomes incapacitated and incapable of carrying out his duties.
The grantor then identifies each beneficiaries and the assets he intends to leave to each of them. It is pertinent to include each beneficiary’s legal full names with the assets being bequeathed to them, and the name and address of the corporations holding each of the stocks or shares and the amount being entrusted to each beneficiary.
That done, the revocable trust document is then granted, and the name of the grantor and the trustee is included in the trust document with their signatures and the date. It is pertinent to note that the signing of the trust document should be witnessed by two or more witnesses or as provided by your state’s bar association. The trust can then be funded by retitling all assets to be placed in it with the name of the trust.
For all your revocable trust related matters, the Leventhal Law Group, P.C offers free and no obligation consultation with a qualified attorney. Call 818-347-5800 for a free consultation today!