Revocable trusts are a popular option in estate planning. They offer a unique blend of flexibility and security, making them an attractive choice for many. Like any legal tool, they come with their own set of features and considerations.
A revocable trust, sometimes known as a living trust can be altered or terminated by the grantor during their lifetime. Understanding a few points may help you to determine if this is a viable option for your estate plan.
Control over the assets
One of the main attractions of a revocable trust is the level of control it offers. You maintain control over the assets within the trust while you’re alive and well. You can also change any terms of the trust. This flexibility makes it a preferred choice for those who want to keep their options open and adjust as their life circumstances change.
Lack of creditor protection
It’s crucial to be aware that revocable trusts don’t provide creditor protection for the assets they hold during your lifetime. Since you maintain control over these assets, they are still considered part of your estate in the eyes of creditors. If you face legal judgments or outstanding debts, the assets in the trust could be used to settle these obligations. If creditor protection is a significant concern, other irrevocable trusts are worth considering.
Privacy for beneficiaries
Another significant advantage of a revocable trust is the privacy it offers to your beneficiaries. The trust can distribute these assets directly to your beneficiaries without the need for probate. This typically appeals to those who prefer to keep their financial affairs and final wishes private.
Each person’s situation is unique, so you must consider your needs and wishes. Working with someone familiar with your situation may be beneficial.