Although a will is an essential part of an estate plan, a very common document to include in any estate plan is a revocable living trust because of the many benefits it provides to pass on property and avoid probate.
What is a revocable living trust?
A revocable living trust is a document that allows for someone to be responsible for your property. While you are alive that person can be you. It is called a “living trust” because it is established while you are alive. It is revocable because you can change your mind and change any of the terms in the trust, including dissolving the entire trust document.
Every trust contains three persons (or group of persons): the trustee, the trustor, and and the beneficiaries. The trustee is the person responsible to manage the property contained in the living trust. The trustor, or settlor, is the person who creates the trust. The beneficiaries are the persons that will receive any property that is in the living trust.
While you are alive you can be the trustee of your own trust. The trust would name a successor trustee to take over after you die and to be in charge of distributing assets to the beneficiaries.
In general, a trustee is in charge to manage and control property within the trust. Upon the trustor’s death, a trustee would also be in charge both to manage and distribute trust assets. A trustee is a fiduciary, so the trustee would have a legal responsibility to do what the revocable living trust says.
In addition, a trust can include language to require a successor trustee if you become incapacitated. This could be important if you are unable to manage or control your own property and would need the assistance of someone else to help with management and control. If you did not have a revocable living trust, a conservatorship would be required, which is court monitored.
Unlike a probate proceeding, the actions taken under a revocable living trust do not require court supervision.
What is the advantage to avoid probate?
It is often said that a revocable living trust avoids probate. This can be advantageous because probate is costly and timely. Probate is a legal proceeding that occurs in court, and there are costs associated with filing documents and handling the matter. In addition to fees the court charges, you may need to hire an attorney to handle the probate matter.
In addition, because probate is a court proceeding, it is public, while a revocable living trust is generally private only to the parties in the trust.
Although a lawyer is not required to draft a revocable living trust, it can be advantageous if you have questions or concerns regarding the contents of the living trust.