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What
is a Revocable Living Trust?
A Revocable Living Trust is a document which directs how your estate
should be distributed after your death. When properly created, having a
Revocable Living Trust can transfer Trust property directly to the
beneficiary without a probate. A Trust is created and a Trustee is
appointed to manage your estate. You must transfer ownership of all your
property, including (for example) all real estate, personal property,
bank accounts, and pension accounts to the name of the Trust while you
are alive.
How do I know
if I need a Revocable Living Trust?
In many states, a Revocable Living Trust can help avoid the high cost
found in states other than Washington. Washington State has low probate
costs, so it is usually less expensive to write a Will and probate it
than to create and manage a Revocable Living Trust through your entire
life.
What are the
advantages of a Revocable Living Trust?
When properly created, having a Revocable Living Trust means that assets
you put into the Trust can be passed to the beneficiary without a probate
when you die. A properly created Revocable Living Trust can also avoid
the necessity of having a guardianship established if you become disabled
in the future. Since Revocable Living Trusts are not usually filed with
the Court, having such a Trust gives you a greater degree of privacy than
a Will which becomes part of the public record once it has been filed
after your death.
What are the
disadvantages of a Revocable Living Trust?
The primary disadvantage of a Revocable Living Trust is the expense of
both creating and managing the Revocable Living Trust. It is usually more
expensive to prepare a Revocable Living Trust and to transfer the assets
than it is to prepare a Will. There can be added costs of transferring
ownership of all your assets to the Trust. Unfortunately, many people who
have Revocable Living Trusts fail to transfer their assets into the
Trust, so the estate must go through probate anyway. Revocable Living
Trusts can be expensive to manage. If you name a professional trust
company to act as your Trustee, the Trust will pay it’s management fees.
If you name an individual to be your Trustee, that person is also
entitled under Washington State law to be paid a reasonable fee.
Are there ways
to avoid Guardianship without using a Revocable Living Trust?
Yes. Durable Powers of Attorney can avoid the need for a guardianship if
you become disabled. Durable Powers of Attorney can cover both health
care issues and financial issues and can be written by an attorney for
much less than the cost of a Revocable Living Trust.
Are there other
types of Trusts?
Yes. A Testamentary Trust is created by your Will, and upon your death
establishes one or more trusts for one or more of your heirs. Specific
terms can be written into a Testamentary Trust such as when the money in
the Trust can be distributed to the heir or for what purposes Trust money
can be spent.
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