Should You Get a Revocable Living Trust?
For many Connecticut residents, the idea of creating a trust for their families’ benefit can seem out of reach, or unnecessarily complicated. Knowing how these estate planning tools operate and when you should get a revocable living trust can help you protect your family, and your assets, after your death.
What is a Revocable Living Trust?
A revocable living trust is an estate planning document that can help you leave your real and personal property to the people, organizations, and causes you care about most, without having to go through a lengthy probate process. You can work with an estate planning attorney to write living trust documents while you are alive and well. During your lifetime, you can manage your own affairs, adding to or using trust assets as you need them. Then, when you pass away or become unable to handle your own affairs, management of the trust passes to a successor trustee whose job it is to manage and distribute the assets of the trust according to your wishes.
The “revocable” part of the trust formation gives you the flexibility to create and fund a trust without worrying that you will need the assets later on for things like medical care or an unexpected purchase. As the grantor (the one forming the trust), you can revoke the trust agreement at any time and take possession of your assets. You can also modify the trust’s beneficiaries to account for changes in your family that happen during your lifetime.
When Revocable Living Trusts Are the Right Choice
Revocable living trusts are the right choice if you:
Want to Avoid Probate
Most people who form revocable living trusts do so to avoid going to Connecticut probate court. Probate can be time-consuming and expensive, and sometimes makes your family vulnerable to challenges from creditors, distant relatives, and would-be heirs. In addition, if you own real property in multiple states, your loved ones may need to open “ancillary probate” matters in each state.
Trusts, including revocable living trusts, remove assets from your probate estate. By transferring property from your name into the trust entity, you set it outside the reach of the probate court. This can reduce the cost of probate, and in some cases can limit or even avoid the probate process entirely.
Anticipate a Long Period of Disability or Mental Incompetence Prior to Death
Medical science is making it easier than ever to understand and predict the illnesses and disabilities that affect end of life care. If you have a family predisposition to a degenerative disease, or have received an early diagnosis, a revocable living trust can help ensure you have the funds available for your care. When you can no longer handle your finances or personal affairs, a successor trustee can step in and handle your finances for you.
Have Minor Children or Dependents
In many cases, children either can’t or shouldn’t inherit real property or substantial assets directly. When a minor is named as a beneficiary in a will, a parent or guardian generally takes possession of those assets until they come of age. A revocable trust can avoid going through the probate process of having a trustee named to manage your children’s inheritance. The successor trustee can manage your children’s assets until they come of age, and make sure the funds are used to support their upbringing. If you have a special needs child, a trust can also keep them from losing access to state benefits, ensuring that they can continue to receive the care and support they need.
Desire to Control Your Property After Death
Turning 18 doesn’t mean your children will be ready to make wise investment or financial management decisions. In some families, disabled or troubled adults may also need someone else to manage their money on their behalf. Unlike a will, a revocable living trust allows you to put restrictions and conditions on how trust funds and assets are distributed to your beneficiaries. You could:
- Award completion of college, marriage, or other life events
- Restrict distribution of funds to limit the reach of your beneficiaries’ creditors
- Allow periodic distributions to supplement your children’s income
- Require the trustee to approve the use of trust funds to avoid wasteful purchases or ill-conceived investments
Alternatives to Living Trusts
Not every estate plan needs to include a trust. Revocable living trusts do require a certain amount of management and oversight, and that comes with a higher up-front cost. Sometimes you can accomplish many of the same goals with other estate planning choices. Before committing to creating a revocable living trust, talk to your estate planning attorney about:
- Asset protection trusts (sometimes called irrevocable trusts)
- Joint ownership with survivorship rights on real property, vehicles, and bank accounts
- Transfer on Death accounts and beneficiary designations for retirement assets and investment accounts
- A combination of a will and powers of attorney to reduce estate planning costs
How to Decide if a Trust is Right for You
The best way to decide if a revocable living trust is the right decision for your family is to schedule a consultation with a Connecticut estate planning attorney. At that consultation, your attorney will review the property you own and your goals for using it. Then they will advise you about the best estate planning strategies for your circumstances.
The estate planning attorneys at Lawrence & Jurkiewicz, LLC represent clients in Hartford and Litchfield Counties. Attorney Edward Jurkiewicz helps individuals and families plan for their future. He can help you decide whether you should get a revocable living trust, and make sure it is properly created and funded to protect you and your family. Please call us at (860) 264-1551 or contact us at your convenience to start planning for your family’s future today.