Is a Revocable Living Trust Better Than a Will?
Whether you own a large estate or a small amount of property, you have a number of options for passing along your worldly possessions and providing for your loved ones after you’re gone. One option the American Association of Retired Persons reports has been growing in popularity in recent years is something known as a revocable living trust.
Advantages of Trusts
According to AARP, revocable living trusts are attractive to many baby boomers either nearing or entering retirement. But the benefits are available to adult wage earners of all ages. A trust allows you to control the timing of the distribution of your assets to your beneficiaries, rather than paying out everything all at once upon your death.
For instance, let’s say you want to provide for your children’s college tuition, but you recognize that a young person who suddenly receives a financial windfall might be tempted to spend it all, squandering the money that had been set aside for their education. You could set up the trust to pay out the assets over four years. You could also specify the exact amounts you want distributed at each interval.
Is a Will Good Enough?
It is possible to write a will that creates a trust upon death. Known as a “pour-over” will, it contains a provision directing that assets pour over from your estate into the trust when you die. The trust is overseen by a trustee who is then responsible for paying out claims and distributing the assets.
By contrast a living trust, as the term implies, is created while you’re still alive and allows you to manage what goes into it by designating yourself as the trustee. The living trust is considered “revocable” because you can change it, withdraw assets from it, or terminate it any time, provided you are not incapacitated.
One advantage of a living trust over a will has to do with avoiding probate – the legal procedure for determining the validity of a will and transferring the deceased person’s assets under the terms of the will. The property held in a trust bypasses that process. The same is true of life insurance policies and other “pay on death” accounts.
Trusts Are Not For Everyone
So is a trust right for you? The AARP advises consumers that for those of modest means, wills are generally less complicated, less expensive to execute, and may be just as effective when it comes to transferring assets.
For those owning property in multiple states, however, the Florida Bar Association suggests there may be some real advantages associated with setting up a trust. As the association’s online guide to revocable trusts explains, “Because of the nature of real estate, probate is usually required in every state in which you own real estate. This can usually be avoided by transferring ownership of the real estate to your trust during your lifetime.”
The Florida statutes governing trusts seem endless. If you decide to establish a trust as part of your estate plan, you’ll need an attorney to help you navigate all the rules.
At the Law Offices of Larry E. Bray, P.A., we can help you determine if a revocable trust fits your financial planning goals. We’ll explain how revocable trusts work in further detail and answer any questions you may have. To arrange a consultation, contact our Lake Worth, Boca Raton, or West Palm Beach office today.