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What is a Revocable Living Trust

A revocable living trust is a legal tool used in estate planning to minimize the hassles that come with probate and may reduce estate taxes as well. It involves the transfer of assets from one person to a trustee, who manages the trust assets. 

Key Points to Understand a Revocable Living Trust

A revocable living trust gives your trustee the power to make financial decisions on your behalf or handle your finances in the event of incapacitation.  People also often use trusts to retain control of their property and to designate who will receive money and property once they die.  Additionally, a revocable living trust provides a way to retain control over your assets and avoid the probate court system. 

Advantages  of a Trust: 

  • Protects in case of incapacity.

  • Permits transfer of probate assets outside of probate

  • Preserves privacy.

  • Effective once signed and funded.

  • Some trust tools may be used to optimize tax liability

Drawbacks of a Trust

  • More complex and costly process to set up.

  • Does not protect against creditors

  • Cannot designate guardianship for minor children.

It is important to understand that a trust does not replace the need for a will.  For trust-based estate plans, we prepare what is known as a "pour over" will.  This type of will ensures that any assets held by the trust is transferred to your trust upon your passing.

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