An increase in interest in estate planning also has led to an increase in popularity of revocable living trusts, also known as power of attorney or living trust. Perhaps you have heard about them before, but maybe you’re fuzzy on all the facts. Essentially, a revocable living trust forms a legal bond between you and the Trustee, allowing you to revoke it in the future. This lets you continue to use funds deposited in the trust account even after you are dead or no longer accessible to the Trustee.
The major benefit of revocable living trusts is that there is a way to avoid probate. Instead of having to go through a tedious and expensive process of selecting a qualified probate lawyer and having him take over the estate for you, the Trustee will act as your legal representative until you die or remarry. When you revocable trust is set up, the Trustee and successor trustee will appoint one another. If you wish to designate a different person, the Trustee may do so as well. In this case, there is no probate, and beneficiaries will be able to access their inheritance immediately.
Revocable living trusts are commonly set-up for many different purposes, including asset protection, as well as estate planning and retirement savings. You can utilize various types of revocable living trusts, and they can be either set up as a sole living trust or joint living trust. A sole trust is when one party owns the assets in the revocable trust and the other party do not. For example, you could set up a revocable trust with your daughter as the beneficiary, and your son as the trustee.
Joint living trusts are formed when two people are married and are involved in a civil union or cohabitation. In this case, both parties have a stake in the trust and control it. Unlike sole trusts, a joint revocable trust allows for some flexibility, and people can make adjustments to it as needed. This is why they are an attractive method of protecting assets during a divorce proceeding.
If you are going through a divorce, the court may award you alimony. In this situation, the court can establish a sole living trust to help pay for your ex-spouse’s living expenses while you are still living. In some cases, the judge may also want to award you both custody of your children. A revocable trust can serve as a temporary trustee to hold all of the assets until a new judge is assigned. This is why a revocable trust is an important part of any divorce agreement, especially for asset protection.
In conclusion, if you are going through a divorce, a revocable trust is an excellent way to protect your most valuable assets. They allow for a lot of flexibility while still maintaining a level of separation from your other assets. For many people, a revocable trust makes sense under all circumstances.