How does a revocable trust fit into my estate plan?
When creating an estate plan, a revocable will is one of the most powerful instruments at your disposal. It can streamline the management of your assets and distribute them more efficiently, avoid probate and plan for incapacity while giving you flexibility during your life. To create a comprehensive estate plan, it is important to understand how a trust works and how they complement other elements. What is a Revocable Estate Plan?A Revocable Trust is a legal entity which allows you to name a Trustee, who will manage and protect assets held by the Trust for the benefit of others. All trusts can be divided into two categories: testamentary or living. A testamentary trust does not become active until after the Grantor has died. It is activated through a clause in the Grantor’s Last Will and Testament. As the name implies, a living trust is administered by the Grantor during his lifetime. A living trust may be irrevocable or revocable. The Grantor may modify or terminate a revocable trust at any time for any reason. By contrast, an irrevocable living trust cannot be modified or terminated for any reason by the Grantor after the trust is created.Distributing Assets Using a Revocable Trust
A revocable trust can be used to manage and distribute your assets according to your wishes both during your lifetime and after your death. You may want to use a trust to distribute assets to charities and protect vulnerable beneficiaries. For example, you might want to use a trust to distribute assets to several charities each year, making use of the annual exclusion or appoint a professional Trustee to manage assets for a beneficiary who has addiction problems or a tendency to be a spendthrift.
Avoiding Probate with a Revocable Trust
Unlike a Last Will and Testament, assets held in a revocable trust do not go through probate, which can save time and reduce expenses for your beneficiaries. Probate is time-consuming, costly, and public. This can create complications for your loved one’s. However, assets transferred into a Revocable Trust are not subject to probate and become trust property. If you own real estate in multiple states, for example, having a revocable trust allows you to avoid the need for ancillary probate proceedings in each state which can simplify the estate administration process for your heirs. If you own real estate in multiple states, for example, having a revocable trust allows you to avoid the need for ancillary probate proceedings in each state which can significantly simplify the estate administration process for your heirs.
Incapacity Planning with a Revocable Trust
As the Grantor of the trust, you name yourself as the Trustee and name someone you wish to take over control of your assets in the event of your incapacity as the Successor Trustee. As the trust is revocable, assets can be easily transferred in and out. As Trustee you have control of the assets while you’re able. However, if you are incapacitated the control automatically transfers to the Successor trustee without the need for a court order. This ensures that someone of your choosing takes over control of the trust assets during your incapacity.
Providing Flexibility and Control During Your Lifetime
A revocable trust offers unparalleled flexibility because as the Grantor, you can add or remove assets, change beneficiaries, or modify the terms of the trust at any time. This flexibility is especially beneficial if you or your family’s circumstances change. The way a trust can be revocable depends on the goals you have. Join us for a FREE seminar to learn more about how we can help you incorporate a revocable estate plan. Contact the Indianapolis estate planning attorneys of
Frank & Kraft
for assistance in incorporating a revocable estate plan. Call
(317) 684-500
today to schedule an appointment. Mr. Kraft’s primary areas of expertise are estate planning and administration. He also assists clients in Medicaid planning, federal taxation, corporate law and real estate.
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