A revocable living trust is a legal document that allows you (the grantor) to transfer your assets into a trust during your lifetime. The trust assets are managed by a trustee of your choosing and, upon your death, the assets are distributed to the beneficiaries you have designated in the trust document.
The primary purpose of a revocable living trust is to avoid probate, which is the court-supervised process of distributing a deceased person’s assets. Probate can be time-consuming, expensive, and a matter of public record. By placing assets in a revocable living trust, those assets can typically pass directly to the beneficiaries without going through probate.
However, there are certain situations where a revocable living trust might not entirely eliminate the need for probate. Here are a few examples:
1. Assets not properly funded into the trust: For a revocable living trust to avoid probate, it’s crucial to transfer ownership of your assets into the trust. If you fail to fund assets properly—for instance, failing to retitle real estate or update beneficiary designations on financial accounts—they may not be included in the trust and may require probate (unless you’ve named a specific beneficiary).
2. Assets acquired after creating the trust: If you acquire new assets after establishing your revocable living trust and fail to transfer them into the trust, those assets might be subject to probate.
3. Out-of-state property: If you own real estate or other assets in a different state or country, and did not transfer those assets into your trust, those assets might be subject to that jurisdiction’s probate laws, even if you have a revocable living trust in your home state.
It’s important to note that the laws governing trusts and probate vary by jurisdiction, so it’s advisable to consult with an attorney who specializes in estate planning to understand the specific requirements in your area. They can help you create and fund your trust properly to maximize the benefits of avoiding probate.
If you would like help with a revocable living trust, you can call or text us at CALL.