A trust is an agreement between someone who creates the trust and usually funds it (the trust creator), the person who manages it (the trustee), and the person who benefits from it (the beneficiary).
A revocable living trust is an agreement where all those roles are in one person and that person retains the right to amend or revoke the agreement.
Hence, it is a living trust. Assets in this trust do not go through probate. Instead, the named successor trustee has the legal responsibility of making sure the trust terms are carried out.
Again, the court does not need to be involved. That is why revocable living trusts are so powerful and sought after.
Leaving assets to loved ones "in trust" can protect those assets. This too can be very beneficial for you and your family, as it can protect the assets from many lawsuits and guarantee they will remain in your bloodline.
If you answer "yes" to any of the following questions, then using a trust can help you protect and preserve your family wealth from non-tax-related threats, such as divorce, loss of government benefits, wasteful spending, and lawsuits.
1. Do you have a married child who might become divorced later in life? Unfortunately, in modern times the risk of divorce is high. Some statistics indicate that nearly 50% of newly married couples will eventually divorce.
Leaving assets to your married child in trust, instead of outright, can protect these assets from claims of alimony and division in a divorce.
2. Do you have a child or grandchild with special needs? If this loved one receives government benefits, then leaving assets to this person in trust, instead of outright, can help preserve these benefits for your loved one.
3. Do you have children or other loved ones who have demonstrated an inability to manage assets? Perhaps, they are in serious debt or have a gambling problem. Leaving assets to them in trust, instead of outright, can protect these assets from irresponsible behavior.
4. Do you have a successful child who is in a high-risk profession? Perhaps you have a child who is a surgeon. This profession brings with it a significant exposure to liability from lawsuits. Leaving assets to such a child in trust, instead of outright, can protect these assets from future lawsuits.
While there are many tax-related benefits that can be achieved with trusts, a carefully tailored trust can accomplish many non-tax objectives that can go a long way to protecting and preserving your family property.
These matters should be considered in every case.
Mark F. Winn, J.D., Master of Laws (LL.M.) in estate planning, is a local asset protection, estate and elder law planning attorney. mwinnesq.com