Is a Revocable Trust Always Effective?

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KS and MO Attorney Kyle E Krull

Written by Kyle Krull

Attorney & Counsellor at Law Kyle Krull is president of the Law Offices of Kyle E. Krull, P.A., an Estate Planning Law Firm located in Overland Park, KS. Estate Planning Attorney Kyle Krull has provided continuing education instruction to attorneys, accountants, and financial professionals at local, state, and national programs.

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POSTED ON: May 4, 2023

A revocable trust must be funded to be effective. Follow through is important. Committing to an athletic training routine will improve your ability in a given sport. Making good on your word builds trust. According to a recent The National Law Review article titled “’It Ain’t Over ‘Til It’s Over’ – Use of a Funded […]

A revocable trust must be funded to be effective.

Follow through is important.

Committing to an athletic training routine will improve your ability in a given sport.

Making good on your word builds trust.

According to a recent The National Law Review article titled “’It Ain’t Over ‘Til It’s Over’ – Use of a Funded Revocable Trust in Estate Planning,” following through on trust funding is essential to its proper functioning.

A revocable trust is a useful estate planning tool.

A revocable trust must be funded.

Revocable living trusts (RLTs) are designed to streamline asset management and allow for private asset distribution.

A person who creates a trust is called a grantor, trustmaker, settlor, or trustor.

Typically, the grantor is also the initial beneficiary of the trust.

Also, while grantors are alive and have legal capacity, they tend to serve as the initial trustees.

A trustee is appointed in the RLT to manage the assets titled to the RLT for the benefit of listed beneficiaries.

Trustees who are not the grantor cannot make changes to or terminate the trust.

With a RLT, the grantors may retain control of the trust assets during their lifetimes.

After the death of the grantor, the trust becomes irrevocable and successor trustees must distribute assets according to the trust agreement.

This only works for the assets placed in the trust.

And that is the rub.

Forgetting to fund the trust will create significant future problems.

Some assets are better left outside of your trust.

An experienced estate planning attorney can help you identify where each asset will serve your estate plan best.

Assets held or titled to a RLT bypass probate.

In probate, state regulations and statutes must be followed as the court oversees the administration of the assets.

Probate can take a long time and may become costly with complex estates.

Both probate costs and fees for attorneys can add up.

Because probate is overseen by the courts, the last will and testament becomes a public document when filed with the court.

This means anyone can request to view your last will and all probate filings to see your assets and your beneficiaries.

Those who value confidentiality may be better served by a RLT.

Keeping your affairs private can be essential if you have complex family dynamics or own a business.

If you own a business, then the value will be reported to the probate court.

Any future buyers of your business may be able to use this as leverage against your estate.

Using a RLT keeps this information private.

By having IRAs, life insurance policies, and retirement plans paid to your estate, they can be vulnerable to creditors.

When paid to a RLT, these assets can be shielded from creditors.

If you think a RLT could benefit you and your loved ones, then you should schedule an appointment to discuss your goals with an experienced estate planning attorney.

Reference: The National Law Review (March 3, 2023) “’It Ain’t Over ‘Til It’s Over’ – Use of a Funded Revocable Trust in Estate Planning”

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