A revocable living trust is a document that states by which a person (the grantor) transfers ownership of property into a trust prior to death. This can be similar to a will by clearly defining the assets to be distributed upon death, however unlike a will, a revocable living trust can be established to govern the distribution and effective use of the trust’s assets while the grantor is still alive.
In essence, the trust is like a rulebook which can be completely revoked, or later modified by the grantor. and establishes a basis for how the grantor’s assets are to be handled while they are alive and subsequently after death.
By establishing a revocable living trust, it may provide the following benefits:
Avoidance of Probate. Probate is where the legal system decides the rightful owner of assets after death. Assets owned in an revocable living trust do not pass through the probate process, potentially enabling a faster and less costly method for transferring assets upon death than by a will, which would require probate and sometimes court supervision. A revocable living trust also can be especially useful in avoiding multiple probate proceedings when an individual owns real estate or other property in multiple states.
Protection of your Privacy. At an individual’s death, when assets are passed to the heirs through probate under a will, probate may expose details of an estate to the public through public probate court filings. Something you probably don’t want! In contrast, trusts allow the transfer of assets to remain private within the constraints of the trust document.
Segregation of Assets. A revocable living trust may be useful for married couples that have separate property they had individually acquired prior to the marriage. In community property states, a revocable living trust can be helpful in segregating those assets from what is considered community property assets.
Estate Tax Minimization. A revocable living trust does nothing to save estate or income taxes during life, but provisions can be included in the trust, as with estate tax-efficient wills, to take advantage of estate tax exemption amounts at death.
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