Many people often wonder if they need a trust or if a simple will is sufficient for their purposes. A living revocable trust can be extremely beneficial to many people if it is used properly and is drafted by someone who focuses on this area of law. The most common reason for using this type of trust is to avoid probate. Upon someone’s death probate is often required if the person who died had real estate in his or her own name and/or assets in excess of $100,000. The expense and the time it takes to go through the probate process can be avoided.
In addition to avoiding probate, a properly drafted and utilized living revocable trust can be beneficial to someone who cannot, or who does not want to, make financial decisions. Another person, bank, or trust company can be named to make these decisions. A living revocable trust can also be used to give someone a stream of income without giving them control of the assets; this is extremely important if you have minor children or if you would be giving your assets to someone who is not accustomed to handling finances.
While there are numerous benefits to using a revocable living trust, assets need to be renamed in the name of the trust for it to be effective. For example, if John Smith has a house in his own name, and he subsequently executes a living revocable trust, a new deed should be recorded to show the trust owns the home. Probate would necessary if a new deed was not recorded and unfortunately many people are shocked to learn their homes were never transferred into their trusts! Once a home is transferred to a person’s trust, it is often necessary to notify your insurance agency to properly maintain coverage.
* Please note that this article is for educational purposes only and may be considered advertising material. This article is not legal advice. You should consult an attorney regarding any legal matters.