Establishing a revocable living trust can prove wise, according to one estate planning attorney. What is a revocable living trust? It’s a living trust established with your own assets and under your terms. It can be changed or terminated at any time before your death.
Although there are no income tax or estate tax benefits involved, many people opt for a revocable living trust to avoid probate by passing along their assets through the terms of the living trust as opposed to through a will. The living trust can also expedite the distribution of an estate. Another benefit is the privacy factor. A probated will becomes public record, while in contrast a living trust may serve to keep the details of your assets private.
While there is no income tax or estate tax benefit in establishing a revocable trust, and the assets of the trust can be accessed by creditors, those with significant assets often find them useful. This is because the trustee is not required to attain estate tax waivers for property held in trust, which offers certain advantages for estates with assets in excess of $675,000. This is because financial institutions can freeze as much as 50 percent of the assets of an estate until a tax waiver is obtained, which can take months.
Keep in mind, there are costs associated with establishing a revocable living trust, such as costs of drafting the trust document and potential costs in transferring the property to the trust.
According to an estate planning attorney, it’s best to transfer all assets except retirement accounts and life insurance policies.
Source: nj.com, “Biz Brain: The benefits of a living trust,” Karin Price Mueller, February 18, 2013