A revocable living trust is a popular estate planning tool. Basically, it is a written document that determines how your assets will be handled after your death. Revocable means that you can change or cancel the terms of the trust at any time during your life.
Sometimes people assume that trusts are only for the wealthy, but a revocable living trust can benefit almost everyone, no matter their net worth. Below are some reasons why you should consider including a revocable living trust in your Phoenix estate plan.
- Avoid Time and Cost of Probate
A major benefit of a revocable living trust is that it avoids probate. Probate is the court process of administering an estate. All property left through wills is subject to probate. Probate can be costly and take months if not years to complete. Your beneficiaries will be subject to court costs and attorneys’ fees. If your estate is small, these costs aren’t high, but they can add up if your estate is more complicated. For example, if you own property in different states, your beneficiaries would be forced to go through multiple probates in each state where the property was located.
With a revocable living trust, the property passes directly to the beneficiaries. There are no court costs and attorneys’ fees. The assets are available shortly after death, which is particularly helpful for beneficiaries that need to pay funeral costs and immediate expenses.
You should consider creating a revocable living trust if you are concerned about keeping information about your assets and beneficiaries private after your death. Some people are surprised to learn that when a will is probated, it becomes public record. Anyone can learn what property you left and how you distributed it.
Revocable living trusts, on the other hand, are private documents. Trust documents do not need to be filed with the court, and no one will be able to look up and discover what property you owned and where it went.
- Reduce Disputes
Revocable living trusts tend to reduce familial disputes. Before the probate proceeding begins, all heirs who have an interest in your estate are given notice of the will, and they have the opportunity to challenge the will. Even heirs that were disinherited are given notice, which can cause disputes among family members. However, there is no notice requirement for revocable living trusts.
- Protects Your Assets If You Become Incapacitated
Another great reason to create a revocable living trust is to protect your assets if you become incapacitated. In a revocable living trust, you can authorize another person to act on your behalf if you become physically or mentally incapacitated and can no longer make decisions on your own. They will automatically be able to pay your bills and otherwise control the trust’s assets.
If there is no revocable living trust or durable power of attorney, a family member or close friend will have to go through a court process and request guardianship or conservatorship. This process can be both expensive and timely. Even after a guardian is named, there is often continued court supervision over the management of the assets.
- Further Management
One benefit of revocable living trusts is that you can put restrictions on how your inheritance is to be managed by your successor trustee. For example, you could set milestone ages when the property should be distributed. This flexibility can be especially helpful if your child has disabilities, fights addiction, or is a spendthrift.
While the trust technically owns the assets, you retain control over the assets in a revocable living trust. The trust document is not set stone. You change or cancel trust provisions at any time. This flexibility is important because life circumstances change, and you want your estate plan to be able to adapt.
- Segregation of Assets
A revocable living trust can help married partners segregate marital property from separate property. Arizona is a community property state. If you are married and have a substantial property that was acquired before marriage, you should consider a revocable living trust.
Your Phoenix Estate Planning Attorney
If you are interested in creating or updating your estate plan, you should consult with an experienced estate planning attorney who understands Arizona’s unique laws and regulations. Nicole Pavlik has successfully helped many residents of Phoenix navigate the estate planning process and is ready to offer you the advice you need. Call Nicole Pavlik Law Firm today at 602-635-6176 to schedule a consultation.