What is a Revocable Living Trust? A Revocable Trust is a one part of estate planning. You create a Revocable Trust while you are alive. As the creator, you are the Grantor.
Think of a Revocable Trust as a will replacement. As Grantor, you decide what assets are owned by the Trust. You decide how to use those assets. When you die, the Trust follows your instructions on distributing the assets. You control who will receive the Trust assets. You control when those persons receive the assets.
While you are alive and competent, you can change the Revocable Trust’s terms. You can even terminate the Trust. Once you die, your Revocable Trust becomes an Irrevocable Trust. Now, the Trust terms cannot be changed.
A Revocable Trust gives you control even after you die
With a Will, you cannot “control beyond the grave.” See, with a Will, you state who gets what when you die. However, once that person receives his or inheritance, that property is their property. Such a person can do whatever he or she wants with the property. You no longer have control over that property.
However, with a Trust, you can exercise control over an inherited property. You decide if a person gets to use the property for a time or own it outright. You determine how that property will be passed to future generations. You can protect family money by making sure the money stays within the family.
A Trust is also a great asset protection tool. You might be remarried with children from another relationship. With a Trust, you can guarantee your children will receive their inheritance.
Maybe you are concerned about nosy neighbors. A Trust provides privacy regarding the assets you own.
A Trust can provide creditor protection for beneficiaries. If assets remain in the Trust after you, the Grantor, dies, creditors cannot attach those assets.
A Trust may also reduce state and/or county taxes. See, when you die with a will, everything you own in your name goes through probate. North Carolina county probate courts taxes that property at forty (40) cents per every one hundred dollars ($100.00). If everything is owned by the Trust at the time of your death, no county taxes. Your executor only pays the filing fees.
Prevents multiple probate proceedings
Do you have assets in more than one state? If so, creating a Trust to own those assets will be helpful. See, if you have assets in more than one state, you will have to start a separate probate process in each state. That means double work and double fees for your Executor. A Trust can avoid these extras.
Future Health Concerns
If you have future health concerns, Trust assets can be used to pay for your care. Your Trustee, a person you choose in advance, manages the assets. No court supervised guardian or conservator needs to manage your assets.