Here are 29 benefits of Revocable Living Trusts.
A trust is easy to create. It ‘s simply a signed agreement between the trustor and the trustee.
The trustor can serve as trustee and even name himself as beneficiary during his lifetime.
As trustee, he can manage the trust ‘s day to day affairs himself (it doesn’t require constant management by an attorney or accountant).
Should the trustor not want to serve as trustee, he has the flexibility to appoint a trustee of his own choice — which could be a friend, relative or financial/investment institution. In respect to his instructions to the trustee, he can be as specific or as general as he wishes to be. He can also specify or pre-appoint a successor trustee, and detem1ine the conditions under which a transfer of trustee power is to take place.
A Revocable Living Trust can be ‘’funded’’ with the separate property of a married trustor, or community property belonging to both spouses. The ownership rights respecting such property will be retained if the trust is revoked or divided. This is an important consideration when setting up a family trust with an A-B Trust provision.
A Revocable Living Trust avoid probate. In other words, it doesn’t die along with the trustor. And all property placed in trust is owned by the trust. Although the trust remains a part of the deceased trustor’s estate, it is not subject to probate.
A trust, by avoiding probate, also avoids expensive attorney and court fees, there by protecting and preserving more of the trustor’s property for the rightful heirs (beneficiaries of the trust).
A trust, by avoiding probate, also avoids unwanted publicity, and affords considerable privacy and peace of mind for the family. There is a minimum of public exposure — no court records, reporting or public procedures.
A Revocable Living Trust can be amended or revoked at any time during the life of the trustor.
A Trust Agreement can give the trustor great freedom and latitude in deciding the disposition of his estate. He can determine who all the beneficiaries are (or will be, as in the case of future offspring or marriages) and he can determine if or when a distribution will be made, and/or under what conditions.
Trust assets can be distributed bef ore or after the death of the trustor without any delays such as those usually encountered in the probate process.
The trustor, of course, can determine the duration of the trust — how long it is to continue — whether based on a term of years, or a future event.
A trust can be used to divide an estate into one or more separate trusts, and can be used to separate business assets and liabilities from personal assets/property.
A larger trust estate can be divided into an A-B Trust arrangement at the death of the first spouse, and thereby greatly reduce costly estate taxes (death taxes) at the death of the second spouse. This is an extremely important benefit! (See additional information in th is booklet.)
A business held in trust can continue operating without being hindered or even destroyed by probate. Instead of conducting business as a sole proprietor, one may simply operate the business as a trustee.
A trust created for the benefit of a child will survive the divorce of the parents, thereby preserving the trust property intact for the intended child.
A trust provides strong legal protection against disgruntled heirs.
A trust is a legal entity (a fictitious person), and entitled to all the rights of an individual under the law.
A trust can legally own any property an individual can.
A trust can take title to property in the same way an individual does. Real estate, for example, is transferred to the trust via a signed and notarized deed.
Assets can be transferred into trust or taken out of trust very quickly, and at any time, simply by changing the appropriate owner ship documents and keeping adequate records of the transfer.
For tax purposes, transfers of real estate title to a Revocable Living Trust generally do not cause the property to be re-assessed to present value and property taxes should not be increased. You should confirm this with your county tax assessor.
A Trust Agreement can be written to allow the trust to freely “move” from one jurisdiction (i.e.: state or country) to another. It’s situs (legal location) is usually detenmined by the permanent location of the trustee, though some legal jurisdictions may also consider the location of the physical assets to have legal bearing on determining trust situs.
Trusts can be written either under state law or under the ‘’common law’’ provisions of the U.S. Constitution.
A Trust Agreement generally does not have to be recorded with any local, state or federal agency, though it can be if desired.
A Revocable Living Trust is considered a non-entity by the IRS for tax purposes. It files no tax return and does not add to the complexity of personal tax planning, as trust profits or losses are included on the the trustor’s personal tax return However, you may request a federal tax ID number for your Revocable
A Revocable Living Trust requires no special accounting procedures or complicated record keeping.
A. Revocable Living Trust can be named a beneficiary of the trustor’s life insurance policy and thereby protect the proceeds of the policy from propate. Such proceeds however will be included in the trustor’s estate for estate tax purposes and could be subjected to estate taxes if the estate is of sufficient size (over $5.45 Million). It is often advisable to have a separate Irrevocable Insurance Trust own such policies.