Revocable Trust

The provisions that are established in a revocable trust can be altered or terminated at any given time. The transfer of assets in this type of trust will not occur officially until after the grantor's death, unlike in an irrevocable trust, which transfers all assets and property over to the beneficiary during the grantor's lifetime. The grantor will continue to administrate his or her estate until death, and only then will the property be transferred to the named beneficiaries or given to a successor trustee to manage.

How do I create a revocable trust?

When beginning a revocable trust, the first thing you should think about is the assets you want to include in your trust. It is usually most profitable to include valuable items such as real estate, insurance, stocks, and other assets. Smaller items are usually not necessary to include in a trust, but rather a will. After you decide what items to include, you should then choose your beneficiaries, that is the persons to whom your assets will be transferred. After you make these choices, you can have a lawyer begin the preparation of your legal agreement. This will need to be signed by both the grantor and the trustee. Once the document is signed and notarized, grantor will transfer property and assets to the trustee. These will be held until the grantor's death, at which time they will be distributed to the beneficiaries.

Could my revocable trust be challenged?

A trust can absolutely be challenged, just as a will, however; it may be much more difficult than a will contest. This is because the contester will have to prove that the grantor was not competent or was unduly influenced at the time of the creation, as well as anytime it was changed or property was transferred. The individual will also have to go through the civil court, rather than the probate court, which will take much longer and will be more expensive. To defend the trust, a trustee may use the trust's assets.

Pros and Cons of a Revocable Trust

Revocable trusts often provide people with a greater sense of security because of the flexibility it provides. Sometimes, there are issues between the grantor and beneficiaries that may cause the grantor to change his or her mind. A revocable trust also ensures that your assets are used to your advantage, as you are still the manager. Another advantage to this type of trust is the speed of the asset transfer, which is generally much faster than cases that are admitted to a probate court.

On the other hand, there are some disadvantages to a revocable trust. First, it does not protect against taxation or debt collection during a person's lifetime, as an irrevocable trust does. It also requires that your property gets re-registered, which may be time-consuming and costly. Lastly, this trust is not subject to court review, which could allow the trustee or executor of the estate to take advantage of the beneficiaries.

To find out if a revocable trust is right for you, contact an estate planning lawyer in your area. The advantages of a revocable trust often outweigh the disadvantages, however; another type of estate planning method may suit your situation better. A legal professional can discuss other options such as alternate trusts, wills, payable-on-death bank accounts to be able to maximize your assets.