Benefits of a Revocable Living Trust as Part of an Estate Plan

A revocable living trust is a valuable estate planning tool that may help you achieve important personal and financial goals for yourself and your family. However, a living trust is not necessarily the best or right choice for all estate plans. Discussing your circumstances and goals with an experienced Arizona estate planning attorney is the only way to find out if you would benefit from including a revocable living trust as part of your estate plan.

What Is a Revocable Living Trust?

A trust is a fiduciary arrangement through which a designated trustee manages assets and distributes them to the trust beneficiaries. A legal document establishes the trust and details the terms under which it is managed and administered, including naming the trustee and beneficiaries. There are many different types of trusts.

A living trust — also called an inter vivos trust — is a trust created during the lifetime of the grantor or settlor (person who establishes the trust). A revocable living trust is one that can be changed or terminated by the grantor during their lifetime. In contrast, an irrevocable trust cannot be changed by the grantor, except in very limited ways permitted by law. Many living trusts are revocable, although some are irrevocable.

When a grantor establishes a revocable living trust, the grantor typically is also the beneficiary of the trust during their lifetime. On the grantor’s death, a successor trustee assumes responsibility for the trust and distributes the assets to the other named beneficiaries in the trust. A revocable living trust may also be written to provide that the successor trustee assumes control if the grantor becomes incapacitated during their lifetime.

If you make a revocable living trust, you retain full control over the assets during your lifetime. You can make unlimited changes to the trust, including adding and removing assets or beneficiaries, altering the distribution or allocation among the beneficiaries, and changing the trustee and successor trustee designations. You are also free to terminate or revoke the trust entirely.

A revocable living trust has advantages over other methods of distributing property in an estate plan. Whether the benefits are important for your estate plan depends largely on your personal and financial circumstances.

Avoiding Probate & Maintaining Financial Privacy

Avoiding the probate process is one of the most important benefits of having a revocable living trust in your estate plan. If an estate is required to go through Arizona probate — as many estates are — the process takes time and costs money, so avoiding the process is desirable. A revocable living trust can accomplish that goal. By avoiding probate, the trust enables estate assets to be distributed more quickly to the beneficiaries, often at a lower cost.

To the extent that estate assets go through probate, the details of the decedent’s financial situation become public information. When an estate avoids probate, the financial details of the estate remain private, which also is a desirable benefit for many people.

Avoiding probate is one of the principal distinctions between trusts and wills. Property distributed in a last will and testament must go through probate in many cases, while property distributed through a properly-drafted trust can avoid the probate process. There are also other ways to avoid probate in Arizona.

Controlling Distribution & Protecting Assets

When a person uses a last will and testament to distribute property, the beneficiaries receive the full value of the property immediately. They are free to use or spend all of their inheritance as they wish (and as soon as they wish).

In some circumstances, it is desirable for beneficiaries not to receive their full inheritance in a lump sum, such as when making testamentary gifts to minor children and grandchildren. Control over estate distributions is also important if a beneficiary may not be financially responsible or there are other issues that make giving them a substantial inheritance a questionable decision.

Using a trust to distribute assets provides asset protection by controlling how and when the beneficiaries receive their inheritance. By giving a trustee authority to determine appropriate distributions to beneficiaries, rather than distributing inheritances directly in a lump sum, a trust can also protect a family legacy from creditors and others, such as divorcing spouses. To accomplish these goals, the trust must be properly drafted by a knowledgeable estate planning attorney.

Should You Create a Revocable Living Trust?

The benefits of a revocable living trust are important for some people, but a revocable living trust is not the right estate planning strategy for everyone. When you are ready to create an estate plan, it’s essential to sit down and talk with a knowledgeable, experienced estate planning attorney. Your lawyer gets to know you and understand your personal and financial circumstances before recommending the best approach and strategy for your estate plan.

You should never attempt to create a revocable living trust or any other estate planning document without assistance from a lawyer. Do-it-yourself estate planning can have disastrous consequences for you and your family. In addition, a trust by itself is not an estate plan. Other legal documents are essential to establishing a complete Arizona estate plan that protects you and your loved ones in the future.

Schedule a Free Consultation With an Experienced East Valley Estate Planning Attorney

At Peterson Law Offices, estate planning is a primary focus of our practice. We assist clients with creating a plan to fit their unique circumstances, including a revocable living trust in appropriate situations. We provide top-quality services at affordable prices. If you don’t have an estate plan, we help you put one in place that fully addresses your goals and circumstances. If you already have an estate plan, we can help with updating your plan or reviewing it to make sure it is current and provides the right approach for your circumstances.

We welcome inquiries from clients throughout the East Valley, including Queen Creek, San Tan Valley, Gilbert, Mesa, and Chandler. Schedule your free initial consultation by calling 480-878-5998 or using our online contact form.