Retirees and others can benefit from a revocable living trust.
Estate planning attorneys ask for a lot of personal and financial information when meeting new clients.
Some people find this to be inconvenient.
This simple inconvenience serves an important purpose.
It helps the estate planning attorney conceptualize the needs of the clients because the information will govern the type of estate plan required.
According to a recent Kiplinger article titled “Four Reasons Retirees Need a (Revocable) Trust,“ assets are not the only factor in the type of plan chosen.
The goals and preferences of those seeking the estate plan are also key.
What are common considerations for determining whether a revocable living trust is desirable?
Would you prefer to avoid probate?
Some people come to the initial meeting with strong opinions about probate.
Those strongly opposed to a last will and testament likely have had previous negative experiences with the probate court.
Others simply have an affinity for trusts because of a pleasant experience with a family trust.
A revocable living trust is typically a good solution to probate avoidance.
A last will does not bypass probate but directs assets through probate to carry out the desired inheritance distributions.
The involvement of the courts can make the process longer and more costly, even if there is no conflict around the estate.
Retirees are especially likely to have assets subject to probate in multiple states.
A revocable living trust will allow for direct distribution to heirs sans probate.
When these are not titled to a trust, the estate must undergo probate in each state.
A caveat to the above: states like Kansas and Missouri have very generous “non-probate” transfer statutes.
If meticulously deployed, virtually all assets (except tangible personal property items) can be transferred by providing the decedent’s death certificate.
Do you want to control your estate?
Without a last will or revocable living trust, the assets passed to heirs are under the complete control of the heirs by default.
This is true also when meticulously arranging non-probate transfers.
For some, this is a disturbing thought.
When adult children have poor financial management, a trust created under a last will or revocable living trust can help create more safeguards around distribution.
People often choose to release certain percentages of assets when specific ages are reached or to make distributions annually following detailed instructions and provisions.
Would you prefer your estate to be private?
Estate planning is an incredibly personal process.
Sometimes, there is tension and heightened emotions around this decision.
Having financial affairs addressed in your last will as part of public record is unthinkable for many.
Making this information available to scammers or estranged family members could lead to issues for loved ones.
Fully-funded revocable living trusts afford more privacy for estate planning wishes.
Do you have a plan for incapacity?
Incapacity planning is essential to comprehensive estate planning.
Common documents include a general durable power of attorney for financial matters, an advance health care directive (with a health care treatment directive and a durable power of attorney for health care decisions), and a HIPAA Authorization.
Whether your last will or revocable living trust funds an ongoing inheritance trust arrangement, you should designate a successor trustee to manage the inheritance trust and its assets smoothly should the primary trustee die or become incapacitated.
Although there are many benefits to a revocable living trust, an experienced estate planning attorney can guide you through the best comprehensive estate plan for your goals and needs.
Reference: Kiplinger (Sep. 13, 2023) “Four Reasons Retirees Need a (Revocable) Trust“