4 Things To Consider Before Completing a Revocable Living Trust

The advantages of a revocable living trust outweigh its potential disadvantages in most cases.  As a result, a revocable trust is the recommended estate planning vehicle for most people.  But there are some things that the creators of revocable trusts should be aware of when deciding to implement a trust.

1. Completing a living trust involves upfront costs.  The cost of planning, drafting, and funding a revocable living trust are generally higher, than other estate planning tools such as wills or testamentary trusts.  In many situations, a revocable trust is desirable because the upfront cost is small compared to expenses that may be incurred due to probate proceedings or litigation.

2. Funding a revocable living trust will require that assets be re-titled in the name of the trust. This can require executing and recording real property deeds; assigning stock, notes, partnership interests, and leases; and changing bank account, life insurance, and retirement beneficiary designations.  Working with a knowledgeable professional can reduce the effort of funding the trust for trustors because estate planning services often include preparation and delivery of the documentation required to re-title assets so as to reduce the requirements of the trustor.

3.  While it will limit the burden of administration, a living trust does require certain steps to be completed after the death of the trustor.  There is a misconception that a living trust requires little to no postdeath administration. But there are a number of items that must be completed during the administration of a trust.  These often include collecting information, valuing and selling assets, settling any debts, preparation of tax returns, and distributing assets. The law generally requires these actions with or without a trust but a living trust will allow a trustee to complete such actions without court involvement.

4. A trust will typically limit the involvement of the courts during the trust’s administration.  This is generally a desirable aspect of a trust but the lack of court oversight should be discussed and considered thoroughly with an attorney before completing your trust.  A knowledgeable attorney will be able to help advise as to if it is wise to limit court intervention in your specific situation.