Monday, February 25th, 2013
One way of avoiding probate is to a Revocable Living Trust.
Advantages of Revocable Living Trust:
- CONTROL: A revocable living trust provides the flexibility of allowing the grantor(s) to be the trustee during life. In other words, the grantor(s) can continue to control the assets;
- CHANGEABLE: A Revocable Trust can be changed or canceled at any point prior to death;
- INCAPACITY PLANNING: A revocable can be used for incapacity planning by having successor trustee or co-trustee take over in the event of incapacity of grantor/trustee;
- PROBATE AVOIDANCE, DEATH AND INHERITANCE PLANNING: Upon the death of the grantor(s), the successor trustee is responsible for executing the instructions of the grantor without court action and privately. The same as a vice president would take over for a president of a company. The line of succession would be clearly stated.
- ACCESS TO FUNDS OR ASSETS OF TRUST: The grantor/trustee is allowed to withdraw or deposit or transfer without limitation.
Disadvantages of a Revocable Living Trust:
- NO ASSET PROTECTION: Since the grantor/trustee has full access, the judgment creditors of the grantor can force collection against the trust.
- NOT OUTSIDE OF TAXABLE ESTATE FOR ESTATE TAX PLANNING PURPOSES: In general, the assets are still considered to be part of the taxable estate of the deceased grantor.