A Missouri estate planning attorney can work with you, review your assets, discuss with you your estate planning goals, and determine if creating a revocable living trust is in your best interest. You will still need a simple will for issues that cannot be included in the trust.
What is a Revocable Living Trust?
A revocable living trust is a trust you create while you are alive. You transfer your property into the trust, so the trust becomes the owner of your property. You name yourself as the trustee. Some people name themselves and their spouse as co-trustees, or another trusted person as a co-trustee. That way, when you die, your spouse will take over and manage the trust.
You also name a successor trustee. When you die, or if your spouse is your co-trustee and your spouse dies, the successor trustee distributes the property that is in the trust in the way in which you have designated it to be distributed.
While you are alive, you control the trust and the property that is put in the trust with the trust as its owner. You can transfer property into and out of the trust. Revocable means you have reserved the right to make any changes to the trust during your lifetime. You may also choose to revoke it and make it as though it never existed.
By setting up the trust this way, you are really looking out for the welfare of your beneficiaries. You save them time, money, and emotional distress since property you designate for them to inherit goes to them almost immediately without the long wait that often occurs when a will is probated.
Advantages of the Use of a Revocable Trust Instead of a Will last will
There are many advantages to creating a revocable living trust:
- Property in a revocable living trust is passed on to beneficiaries without going through probate. The property in the trust is passed to the beneficiaries almost immediately. Property in a will is not transferred to the beneficiaries until the close of probate, which may take months, or possibly even years. There are also expenses associated with probate that are avoided with a living trust.
- No need for probate approval of distribution of assets. Since the probate court is not involved with the living trust, there is no need for court approval for the transfer of the assets according to the terms of the trust.
- Privacy. Probate court is open to the public. When your will is admitted to probate, anyone can view your will and see what assets you had at the time of your death. Court hearings are open to the public, so if there is any dispute, or any challenges to your will, that is also public record. In contrast, property in a living trust can be transferred to the beneficiaries privately by the trustee.
- The trust can own out-of-state real estate. Probate of real property located in another state is avoided since out-of-state real estate can be placed in the trust just like any other asset and passed on to the beneficiary without going through probate.
- The successor trustee can continue to manage the assets. The successor trustee can manage the assets, pay the bills, keep a business running, the same way you did while you were alive. The probate court has nothing to do with the living trust, so there is no interference and no need for court approval of any actions of the successor trustee.
The Disadvantages of Using a Revocable Living Trust Instead of a Will
Despite the many advantages of a revocable living will, there are some disadvantages you need to be aware of before deciding this is the estate planning tool for you. Some disadvantages are:
- The trust must be funded while you are alive. This means you must transfer ownership of the assets you own to the trust, so the trust becomes the owner. This means you must sign over deeds to real estate, the pink slip to your vehicles, etc. This can be time-consuming.
- Beneficiaries must be named. For each item owned by the trust, you must name the person who you want to be the beneficiary for that item.
- Monitoring the trust. When you purchase a new asset, you want to be sure the owner of that asset is the trust and that you have designated a beneficiary. There is an ongoing need to keep the trust updated and current.
- Tax benefits may not be as good. For just one example, probate estates may use a fiscal year for filing taxes, whereas living trusts must use a calendar for filing. There are other tax issues you’re your estate planning attorney will discuss with you.
Why You Will Still Need a Will
If you have minor children who need you to name a guardian in the event of your death, you must do this through a will. This cannot be done with a trust.
Also, a “pour over will” is designed to make the trust the owner of property that was, for some reason, not included in the trust. For example, if you are killed in a car wreck, the insurance proceeds, or wrongful death settlement funds, will not be in your trust. Without a will naming the trust as owner of those funds, the Missouri state law about intestate succession (dying without a will) would control who inherits that money.
Contact an experienced Missouri estate planning attorney who will help you establish your revocable living trust and your accompanying will.