The Revocable Living Trust
A commonly used tool to avoid probate is the Revocable Living Trust. To create a Revocable Living Trust, a person typically transfers the person’s assets to himself or herself as trustee and signs a written trust document that contains instructions as to what the trustee is to do with those assets while the person is alive as well as upon death. The trust document also identifies who should take over as successor trustee when the person is no longer able to serve due to death or incapacity.
During life, the person’s assets in the trust may generally be used in any way the person, as trustee, directs, and the person may change the instructions in the trust document by written amendment. If the person becomes incapacitated, the successor trustee is instructed to use the trust assets for the person’s care.
At death, the successor trustee wraps up the person’s affairs by utilizing the trust assets to satisfy all of the person’s liabilities and distributes the remaining assets as directed in the trust document. Generally, no court supervises the process, so no court fees are incurred and advisors’ fees related to preparing court filings are avoided. Also, the uncontested administration of a trust is a private matter with nothing becoming public record. This process often results in a much better outcome for the person’s beneficiaries as compared to having the assets pass through a court-supervised estate administration process.
The federal estate tax exemption amount typically changes from year to year. The attorneys at Anderson & Hinze Law can advise you on the current status of the law.