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Revocable living trust 101
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Photo Credit: Cindy J. Grady
As I mentioned in my earlier article entitled, "Estate planning celebrity style," (find it here http://budurl.com/3e93), I listed the documents necessary for a basic estate plan. Today's article starts with that first document called, "revocable living trust." Often the acronym, “RLT,” is used to describe such a document.
What is a revocable living trust? This type of trust is sometimes called a revocable inter-vivos trust. Inter-vivos means that it is created while you are living. Revocable means that it can be revoked, changed, or discontinued by you, the Trustee or Grantor. This document creates the entity to which you transfer ownership of your assets. It also contains instructions for managing your assets during your lifetime and for their distribution upon your incapacity or death.
Why a revocable living trust? You're revocable living trust is a method of avoiding the probate process and minimizing estate taxes. If your assets are owned by your trust, no court is involved in the transfer of your assets upon your death or the death of your spouse. Therefore, no newspaper notices are required, no records become public, and no statutory waiting periods apply. As soon as any tax matters are settled, your assets may immediately be distributed to your beneficiaries.
Signing your revocable living trust for your RLT to be a binding, legal document, you must sign, and date it in the presence of a notary public at the end of the revocable living trust document. The signing of your legal documents is a process commonly called "execution.”Once it is executed, you cannot write on it at all. This would render it useless. That is why you should keep a working copy, or a second draft of the document to notate changes in your assets or wishes for the distribution of them when that time comes. We'll talk more about this in future articles.
As mentioned earlier, and RLT will enable you to avoid probate. It should be noted that probate is a process controlled by the state that you live in. In California, if your estate equate to more than $100,000 then you most likely have a need for a revocable living trust. But again, I need to make the disclaimer that I am not an attorney and you will need to retain one to get the advice that you need that is unique to you and your current situation.
A revocable living trust is a necessary document in your estate planning. It can save your family exorbitant probate fees, public scrutiny of all your assets, and a lengthy distribution time period in the event of your death. In my next article I'll address in more detail some common Articles that direct and protect your family and its assets.
© 2009 Start Smart Advisor™, Inc.
For more info: there's a wonderful book published by NOLO Press and written by Denis Clifford, attorney. The book is called, "Make Your Own Living Trust." You can find it at www.Amazon.com. I feel I must caution you, however, to have your attorney review any living trust documents you prepare on your own. You need to make sure that your living trust fits you like a glove and only an expert can know that for sure. If you don't, the disaster will lie with your family after your passing. Remember, mistakes are costly; advice is cheap.
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