When it comes to estate planning, most people are already familiar with the role of a will. A will is a legal document that lays out your wishes regarding matters like the distribution of your assets or the care of any minor children in the event you pass away.
However, there is a lesser-known aspect of estate planning that can provide unique benefits and protections to you, and your loved ones should the unexpected occur: a revocable living trust. A trust is a legal contract in which you name a trustee who ensures your affairs are managed according to your instructions during life and death.
Unlike an irrevocable trust, you can revise a revocable living trust at any time. While you may want a trust and a will depending on your specific needs, a revocable living trust has several advantages over a will.
A trust is private
A will becomes public record once it enters the probate process. That means anyone can access information such as the assets you owned and who you left them to. A revocable living trust will not become public record unless a heir or beneficiary challenges its validity in a lawsuit. No one, except for your named beneficiaries, will see your trust.
A trust avoids probate
Probate is a court-supervised process required for those who die with a will and those with no estate plans. A judge oversees the transferring of assets to the named beneficiaries or the heirs of the deceased. A revocable living trust avoids the probate process because the trust “owns” the trust-makers assets and the trust can’t die.
A trust accounts for mental decline
A revocable living trust can prepare your estate for circumstances beyond death, such as becoming mentally incapacitated. Should you no longer be able to manage your own affairs, a trust can specify who will step in to handle your finances and property. Unfortunately, a will doesn’t offer protections for these circumstances.
Deciding if a revocable living trust is right for you is dependent on your concerns and needs. However, if you value privacy, want to avoid putting loved ones through probate or have a plan in place for mental incapacitation, consider adding a revocable living trust to your estate portfolio.