The Hughes Law Firm

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What Are The Benefits Of A Living Revocable Trust?

  • On behalf of: The Hughes Law Firm, P.C.
  • Published: April 3, 2017

A living revocable trust is an increasingly popular option for two reasons: (1) It avoids the unnecessary time, delay and costs associated with probate; and (2) The creator retains complete control.

For example, the individual who creates the revocable trust can also serve as the trustee and name himself or herself as the sole beneficiary. As trustee, the individual has the option of modifying assets or even closing the trust at any time. Upon the individual’s passing, however, the successor trustee will distribute the assets pursuant to the trust instructions, without the need for court approval.

Functionally, the IRS does not view a revocable trust as creating a change in ownership. Said another way, an owner who retitles an asset in the name of a revocable trust, but retains complete control over that asset, really hasn’t given up ownership. Consequently, a revocable trust does not offer tax saving benefits during the trustor’s life.

Yet the advantage of avoiding probate cannot be overstated. In addition, the process of creating a revocable trust starts the discussion of how an individual may want his or her assets transferred to various loved ones or friends.

There is one caveat regarding revocable trusts: Signing the trust document is not enough to avoid probate. An individual must take the time to actually change the ownership title of each asset to the name of the revocable trust. In our next post, we examine some of the logistical requirements of setting up a living revocable trust.

Source: FindLaw, “How Do I Put Money and Other Assets in a Living Trust?” copyright 2017, Thomson Reuters

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