When clients begin the estate planning process, one of the first questions they often ask is whether they need a will, a trust, or both. While every estate plan should be customized to the individual, a Revocable Living Trust (sometimes called a “Living Trust” or “Inter Vivos Trust”) offers several practical and legal advantages that make it an appealing option for many individuals and families.
What Is a Revocable Living Trust?
A Revocable Living Trust is a legal arrangement that allows you—the grantor—to place assets into a trust during your lifetime, manage them as the trustee, and designate a successor trustee to manage and distribute the assets upon your death or incapacity. As the name implies, the trust is revocable, meaning you can amend, revoke, or terminate it at any time, as long as you are competent.
Key Benefits of a Revocable Trust
- Avoids Probate
Perhaps the most well-known advantage of a revocable trust is that it allows your estate to avoid probate. Assets titled in the name of the trust pass directly to beneficiaries under the terms of the trust agreement, without court involvement.
Why this matters:
- Privacy: Probate is a public proceeding; a trust keeps your affairs confidential.
- Efficiency: Trust administration typically moves faster than the probate process.
- Cost Savings: Avoiding court filings, statutory fees, and attorney’s fees can save your estate thousands of dollars.
- Provides for Incapacity Management
If you become incapacitated, your successor trustee can step in and manage trust assets on your behalf without the need for a court-appointed guardian or conservator. This offers continuity and prevents delays in financial decision-making during a crisis.
This complements—but does not replace—a financial power of attorney.
- Flexible and Revocable
You retain complete control over the trust and its assets during your lifetime. You can:
- Move assets in or out of the trust.
- Modify the terms.
- Change beneficiaries or trustees.
- Revoke the trust entirely if your circumstances change.
This flexibility makes it a safe and adaptable planning tool.
- Centralized Asset Management
By consolidating your assets under one trust structure, you simplify administration. Upon your death, your successor trustee has clear authority to manage and distribute trust property according to your instructions, reducing the risk of disputes or confusion.
- Avoids Ancillary Probate
If you own real property in more than one state (e.g., a vacation home or investment property), a revocable trust can help avoid ancillary probate proceedings in each jurisdiction. Titling those properties in the trust streamlines administration and avoids multiple court filings.
- Continued Control After Death
Unlike a will, which simply distributes assets outright, a trust allows you to control the timing and conditions of distributions:
- Delay distributions until a beneficiary reaches a certain age.
- Create staggered distributions to avoid mismanagement.
- Impose conditions on inheritance (e.g., educational achievement, substance-free status, etc.).
- Protect assets from creditors or divorcing spouses through spendthrift provisions.
This level of post-mortem control is especially useful for minor children, blended families, or beneficiaries with special needs.
Common Misconceptions
- “I don’t have enough money for a trust.”
Revocable trusts are not just for the wealthy. Anyone who owns a home, has dependents, or wants to simplify their estate should consider a trust. - “Trusts avoid taxes.”
A revocable trust does not shelter assets from estate tax or income tax during your lifetime. It is a planning tool, not a tax shelter. That said, trusts can be structured for tax planning if needed.
Is a Trust Right for You?
While a revocable trust is not necessary for every client, it offers significant benefits in terms of privacy, flexibility, incapacity planning, and efficient administration. It is particularly advantageous if:
- You want to avoid probate.
- You have out-of-state property.
- You have minor children or complex distribution wishes.
- You are concerned about incapacity or future disputes.
Final Thoughts
At A.H.Steinmetz, Ltd., we routinely help clients determine whether a revocable trust fits into their overall estate plan. A trust is not a one-size-fits-all solution, but when properly drafted and funded, it is a powerful instrument to protect your family and your legacy.
