A revocable living trust is an estate planning tool that can help accomplish certain goals when used in the right circumstances. Like a regular will, a living trust helps you control what happens to your assets when you die. However, unlike a regular will, a living trust goes into effect — as you might guess from its name — while you are still alive.
With a living trust, you transfer your assets into the care and control of a designated trustee, who could be a family member, a financial advisor or attorney or even you. Although the trustee has complete control of the assets, he or she also has a legal duty to handle them in a way that serves your interests.
Why would somebody want to cede control of his or her assets while still alive? Commonly-cited reasons for a living trust include the following:
- It ensures as you get older that, if you become unable to manage your affairs, someone you trust is ready to step in and do it for you.
- It prevents a child who is too young or otherwise unlikely to be able to handle a large inheritance responsibly from coming into complete control of the assets immediately upon your death.
- It helps avoid the probate process upon your death, especially if you own property in several states and would therefore be subject to multiple probate requirements.
- It helps you plan a secure future for a child with special needs and ensure the child does not lose benefits by inheriting money.
Nevertheless, a living trust is not for everybody. You incur a cost to set up the trust and it may have an impact on your ability to refinance property. In addition, some people mistakenly believe that a living trust can reduce or eliminate estate taxes upon your death. In fact, the trust assets are included in your taxable estate (and the vast majority of estates are not subject to estate taxes, anyway).
Estate planning is a complex process that is easily misunderstood. It is imperative to work with a knowledgeable estate planning attorney in Tampa to ensure you make the right choices for you and your family.