Most clients want to create a revocable living trust just to avoid probate issues, because they see probate as a necessary evil. This is not true. Minimizing probate costs is good, but make sure to do it right. Two ways to appropriately detract from probate expenses is to take all of your different trusts and accounts, and consolidate them all to one place. This eliminates the vast majority of paperwork. Secondly, don't let your kids and other heirs fight. How you handle things while you are alive will affect how quickly your probate goes. The more civil the heirs are, the shorter and cheaper it will be. Make sure everything in your will is clear, and covers all possible situations. Once this is done, revocable living trusts can be a great tool in estate and financial planning, but use them correctly and for the proper reasons:
1. Revocable living trusts allow people to stay in control of their assets for a lot longer than they would be able to otherwise by working together with an institution. For example, they can make themselves a co-trustee together with a Bank or other institute. This will protect older clients from those who "prey" on senior citizens.
2. If you have a second home or vacation home, and you want to avoid ancillary probate, re-title the house to a revocable trust.
3. Revocable living inheritance trust / gift trust -A client inherited money or received gifts. This client it married and wants to keep these inherited assets segregated. (Keeping them segregated means that they remain immune from equitable distributions in the case of divorce.) However, more often than not, the assets end up getting commingled. Set up a revocable living inheritance or gift trust. Re-title the assets in name of the trust. Pick a family member (not the spouse) to act as co-trustee with the client, and get a tax id number for the trust. This will protect these assets in the case of a divorce
Revocable living trusts are a phenomenal planning tool, and while they are often misused, there are lots of creative and useful ways to implement them.
The previous tip is based on a short lecture given by Martin M. Shenkman, Esq. To listen to the full audio clip, search "Revocable Living Trusts" on www.LawEasy.com
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