Why Set Up a Revocable Living Trust?

Understanding the nature of a revocable living trust is only as complicated as you think it to be, and how other people explain it to be. There are thousands of people, perhaps you’re one of them, confused with such explanations given by individuals having knowledge on the subject matter. So for the benefit of all, I’ll try define it in the simplest terms possible, for the sake of deeper comprehension, and to ultimately lower the number of baffled chumps – ready? Let’s get on with it then, starting here: basically, a revocable living trust is a legal document stating the manner in which your estate will be distributed amongst the beneficiaries.

Was that a little too hard for your brain power to understand? If so, try this simpleton definition: a revocable living trust is a document (papers) that states the “process” of the disposition of your assets. To be more specific, it’s tells which assets goes to which individuals you’ve assigned or chosen as the beneficiaries. Take for example your car is going to your son, while the house goes to your daughter. As you can see, a trust functions the same way a living will does, but there does exist a key difference, which is: when you die, assets under a trust won’t be subjected to probate.

Probate is a judicial certificate that states legality of a particular document; the process of validation can take awhile. On the other hand, a will doesn’t have that advantage. Moving forward, you’re probably wondering why the term “revocable” has been added to “living trust”, correct? Let’s take a look at the meaning of it for better discernment: what it basically means is “can be cancelled”, therefore revocable living trusts can be cancelled at your will. Not only that, but any changes or modifications can be implemented as well. Having said that, and taken that you’re interested in putting one up for yourself, here’s something else you need to know: the first thing you need to do is go see a lawyer with this as one or the main area of his expertise.

From there he’ll be filling you in with all the necessary details of the entire process, making sure that you understand each and every aspect of importance. Next, you’ll be asked to assign a trustee, or a guy that’ll be placed in charge of the assets under the trust. And of course, you’ve got to assign the beneficiaries, or the people (preferably loved ones or whoever you had in mind) receiving the assets you leave behind when you die. After blabbering all of that, you might be thinking why you should even be considering setting up a trust, correct? Given that I am right, the reason for you to do so would be the “flexibility” and benefits that it’d be coming with.

With this “planning tool”, you’d be able to implement special conditions and terms that you wouldn’t be capable of doing with any other. Take the following for example: you’ve got a 15 year old son with a mental disability. You want him to inherit a large portion of your estate when he reaches the age of 22, but he clearly won’t be able to manage them on his own, given his condition. With that situation, you can always leave his share in the trust, therefore allowing the trustee to handle everything for him. There are other asset protection advantages when it comes to this, as well as disadvantages, so it’s best you consult a professional regarding the matter before you make any decisions.