A Revocable Living Trust is a highly flexible estate planning vehicle. A Trust can include almost any type of property. Additionally, a trust can make plans not only for after death, but also for incapacity. Trusts pass assets to the beneficiaries without court intervention and according to the Trust’s terms. A Trust is a larger investment upfront than just a Will. But it offers greater privacy and efficiency for your beneficiaries.
How Does a Living Trust Work?
A Trust involves three parties: Settlor, Trustee, and Beneficiary. The Settlor establishes the Trust. The Trustee manages the Trust. And the Beneficiary receives some type of benefit from the Trust.
For Revocable Living Trusts, the Settlor occupies all three positions during life. But a Trust must also have named or ascertainable Beneficiaries who will receive the trust’s property once the Settlor passes away.
One of the key differences between a Will and a Trust is that the Trust requires substantial additional work once it is created. The Settlor must “fund” the Trust. This means placing assets into it.
A well-drafted Trust instrument will generally have a Schedule for tangible personal property that does not have any certificate of title or registration. But other types of property, like bank accounts and real estate, must be re-titled so that the Trust is the owner.
This is a significant amount of work. But the benefit is that assets the Trust holds are not subject to probate court proceedings. Instead, the Successor Trustee will handle the assets held in the Trust according to the Trust instrument’s instructions.
Who Should Have a Revocable Living Trust?
A Revocable Living Trust is a great option for several kinds of people. This instrument can be highly beneficial for parents of minor children, small business owners, those with real estate in multiple states, and those who are concerned about family conflict.
Parents with minor children will have a plan established for managing assets if both of them pass away while their children are still minors. Small business owners will have a plan for what happens with the business when the owner passes away, or if he/she is incompetent to make decisions.
Placing real estate into a Trust avoids probate for that property. Otherwise, probate would likely be required in each state where the deceased person held real property. This is often referred to as ancillary probate.
Those who are concerned about a family member or other person contesting a legacy may also wish to set up a Living Trust. The Trust handles the transfer of assets privately and can assist with keeping bad faith contestants away.
Create a Living Trust with Help from Connell Law, PLLC
Tennessee is an excellent state for trusts, as our state trust law offers great flexibility. Connell Law, PLLC is here to assist residents of Rutherford County and the surrounding area with creating Revocable Living Trusts. Reach out to us today to request a consultation.