Revocable Living Trusts

The revocable living trust is fast replacing the will as the “go-to” estate planning tool.  And it’s easy to see why.  Trusts are flexible and powerful.

What a Trust Can Do For You

Is a trust right for you and your family?  Ask yourself these ten questions:

  1. Do you want your assets to avoid probate when you die?
  2. Do you and your spouse have a net worth, including life insurance and retirement accounts, over $2 million?
  3. Are any of your children or other beneficiaries still minors?
  4. Do any of your children or other beneficiaries have a disability or receive government benefits?
  5. Are you concerned about the responsibility level of any of your children or other beneficiaries?
  6. Do you or your spouse have children from a previous marriage?
  7. Are you divorced and have children with your ex-spouse?
  8. Are you concerned about the possibility that your children might be disinherited if your spouse remarried after you die?
  9. Do you want your children’s inheritance to be protected from divorce, lawsuits, and their creditors?
  10. Do you have any property that you want to keep in the family upon your death, rather than being sold?

If you answered yes to even one question, a revocable living trust may help you achieve your goals.

Trusts, New Uses for a Centuries-Old Tool

So now that you know what a trust can do, you might be asking, “how does a trust work?”

First you should know that trusts aren’t new.  In fact, the basic concepts have been around for hundreds of years (dating back to at least the time of the Crusades).

The second thing you should know is that with a revocable living trust, very little will change while you’re alive and well.

A trust is simply a different way of owning property.  Rather than owning property directly, a trustee holds and manages property for the benefit of a beneficiary.

When you create a revocable living trust, you’re both the trustee and the beneficiary.  So you’re managing your property for your own benefit (see, I told you that not much changes).

Using Your Trust

I know that may sound complicated, but it really isn’t.  Most people who have a revocable living trust go about their daily lives just as they always have.

  • You retain complete control over your property.  All decisions on when to sell it, how to invest it, and what to spend it on are yours and yours alone to make.  And you can take any of your property out of the trust whenever you want (that’s what it means to be revocable).
  • You file your taxes exactly the same way you always have because a revocable living trust doesn’t change your taxes at all.  There are no extra taxes to pay or IRS forms to file.  If you do your own taxes or use Quicken, you won’t have to run out and hire an accountant just because you have a trust.

The main difference you’ll see is that occasionally you will sign your name with “Trustee” after it.

Including a Trust in Your Estate Plan

If you are considering a trust as part of your estate plan, contact attorney Natalia Kabbe at Kabbe Law Group in Naperville, Illinois to learn more.