The revocable trust is an increasingly popular tool in estate planning, and indeed a revocable trust can be a very useful thing to have. Unlike wills and testamentary trusts, a revocable trust goes into effect during your lifetime, so you can see the results in real time.
That said, a revocable trust is not a good choice for every person or for every situation. Setting one up is not as easy as some people may think, and it can take a fair amount of work to make sure a revocable trust will work as it is supposed to.
Division of ownership
The point of a trust is to divide ownership of property between a trustee and a beneficiary or group of beneficiaries. A living trust goes into effect during your lifetime. You still provide the property, and the trustee still manages it for your named beneficiaries. You may in some circumstances even name yourself as a beneficiary.
Living trusts can be revocable or irrevocable. Perhaps obviously, a revocable trust gives you more control over the trust, but an irrevocable trust has certain other advantages.
Your living trust can give you many benefits during your lifetime, but for estate planning purposes one of its main advantages is that it helps your property avoid probate.
Transfer of ownership
Where some people go wrong with a revocable trust is in failing to follow through with the required technicalities. If you intend to place your home under the ownership of the trust, you must change the deed to name the trust as the new owner. The same holds true for investment accounts, cars or any other property. When people fail to follow through with these steps, it can mean the trust never legally owns the property, and therefore the property must go through probate. This defeats one of the main advantages of the trust.
Those who are considering a revocable trust should discuss the matter thoroughly with a skilled estate planning attorney.
