As we discussed last week, there are a number of different types of trusts that can be employed when creating your estate plan and/or planning for long term care. This week we will focus on Revocable Living Trusts and why you may or may not want to use them.
A Revocable Trust is often seen as a more flexible option in that it may be changed or terminated at any time. Revocable trusts are typically employed to provide a targeted solution to specific estate planning issues.
One such purpose may be to allow for efficiency when administering one’s estate. When an individual owns property in more than one state, a revocable trust will eliminate the need to open ancillary estates during administration of the estate. Another reason for using a revocable trust can be to avoid probate. This is often due to privacy issues, especially in regard to extremely large estates where an individual may not want the full amount of his or her estate to be publicized. Finally, a revocable trust can be used to protect a trust beneficiary’s inheritance. When a Grantor is worried that a beneficiary may have marital and/or creditor issues, a revocable trust may be used to protect a beneficiary’s interest in the case of divorce proceedings, creditor claims and lawsuits. One caveat however, a revocable living trust does not provide the creator of the trust with protection of their assets during their own lifetime.
A final consideration when utilizing a revocable trust is to make sure that all designated assets are actually transferred into the trust. Since revocable trusts are established while the trust creator is still living, his or her assets will not automatically be transferred into the trust. The onus is on the trust creator and/or their attorney to transfer these assets. This can be done by preparing a new deed in the case of real estate; by retitling securities accounts in the name of the trust; and by changing the beneficiary designation of a life insurance policy to name the trust.
At Zacharia Brown, we have seen many instances where a revocable trust was created by another attorney, but the assets were never transferred into the trust. In those cases, the failure to transfer assets resulted in a defective trust that failed to carry out the trust creator’s intentions. The experienced attorneys at Zacharia Brown work closely with all of our clients when creating revocable trusts to ensure that all details are taken care of. Please contact us at 724.942.6200 or visit us at PittsburghElderLaw.com to schedule an appointment and learn about trusts today.