Revocable Living Trusts: Flexibility, Control, and Protection for Your Estate

If you are like most people, you have probably heard of trusts but may not fully understand the different types or know how they may benefit you. While there are various types of trusts, the most common ones are revocable and irrevocable trusts. In this article, we will focus on revocable living trusts.

A trust is a legal arrangement where a trustmaker transfers ownership of their assets to a trustee, who is responsible for managing those assets on behalf of the beneficiaries of the trust. Think of a trust like a big box where you (the trustmaker) place your assets—bank accounts, stocks, your house, personal property, and more. You hand this box to someone you trust (the trustee) to manage and care for it. However, the trustee does not own the contents of the box. Following your instructions, the trustee is responsible for eventually passing everything in the box on to someone else (the beneficiary).

A revocable living trust is a type of trust that can be altered or revoked by the trustmaker during their lifetime, so long as they are mentally competent to make decisions. The trustmaker often serves as the trustee, maintaining control over the assets in their trust. They can use these assets however they wish while they are alive, and upon their death, the assets are distributed according to the terms outlined in their trust. This setup provides control both during the trustmaker’s life and after their death.

There are several reasons why creating a revocable living trust is beneficial:

Probate Avoidance

If a revocable living trust is fully funded, the trustmaker’s estate will avoid probate. The assets owned by the revocable living trust will pass directly to the beneficiaries as specified in the revocable living trust. This process helps families avoid time-consuming, costly, and sometimes contentious probate proceedings.

Cost

While creating a revocable living trust involves upfront costs, a revocable living trust can potentially save money in the long run by avoiding the expensive probate process. In general, the fees associated with probate include: attorney fees, personal representative fees, filing costs, publication fees, and potential bond costs for the personal representative.

Control

A revocable living trust allows you to control who receives your assets, how and when they receive them, and even set conditions for the use of the assets. For example, you can delay asset distribution to minor children until they reach a certain age or accomplish certain goals. You can also protect beneficiaries from creditors, lawsuits, or future divorces ensuring the assets received are protected.

Privacy

Unlike probate, which is a public process where anyone can see the assets involved and how they are distributed, assets held in a revocable living trust are distributed privately. Since the distribution happens directly, according to the revocable living trust’s terms, the process remains confidential.

Incapacity Planning

A revocable living trust can serve as a safety net if you become temporarily or permanently incapacitated. As the trustmaker, you can appoint a successor trustee to step in and manage the revocable living trust’s assets if you can no longer do so yourself. This helps avoid the need for a court-supervised conservatorship, allowing a trusted person to manage your affairs with ease.

Minimizing Family Conflicts

A revocable living trust is generally less likely to be challenged than a will, especially if it is properly funded while the trustmaker is still mentally capable. It is harder to claim that the trustmaker was under undue influence, or lacked mental capacity, when they were actively managing the revocable living trust themselves. Additionally, because the terms of the revocable living trust are private, fewer people are aware of the asset distribution, reducing the chances of disputes or challenges among family members.

Protection

Occasionally, wills go missing when a family member does not like the terms in the will.  If that happens, the only option for the surviving heirs, is to proceed with probate proceedings. In that case, the distribution of assets will be governed by Alabama’s default plan. A properly funded revocable living trust solves the “missing” will dilemma because the revocable living trust already owns the property.  The revocable living trust will govern the distribution of the assets, not the probate court.

A revocable living trust offers flexibility, control, and protection during your life and after death, making it a powerful tool for managing your assets.

Your Next Step

As you move forward with your estate planning, we invite you to contact our team at Provident Law / Estate Planning LLC. We are here to guide you through the process, ensuring your plan is tailored to your unique needs and goals. Whether you are creating a will, establishing a trust, planning for incapacity, or reviewing existing documents, we are here to provide the personalized guidance you need. Reach out today to schedule a consultation and take the next step to give your family peace of mind.

About the Author

Colin McMichen is an experienced attorney and the founder of Provident Law / Estate Planning LLC, a Birmingham, Alabama-based firm. With a focus on estate planning and probate law, Colin is dedicated to helping individuals and families navigate complex legal matters with confidence.

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