A revocable living trust is often created alongside a will. It allows you to name your trustee and transfer ownership of your property to them. By doing this, your trustee owns it, but you maintain control of the property while you are alive.
Because the trust is revocable you can update or change it anytime during your lifetime.
The pros and cons of creating a revocable living trust
There are several advantages to creating a revocable living trust. They are as follows:
- Avoiding probate: Perhaps the most significant advantage is that upon your passing, the property named in your living trust is not subject to probate. Instead, the trust remains up and running because you have already appointed a trustee.
- Avoiding emergency guardianship or conservatorship: Should you become incapacitated during your lifetime, your appointed trustee can step in and keep your household running. There’s no need for your spouse or children to go through the court to appoint an emergency trustee.
- Your privacy remains intact: When an estate goes through probate the process is public. Because you have already appointed a trustee there’s no need to go through probate, thus your information remains private.
There are also some cons to creating a revocable living trust. These include:
- Funding a living trust is expensive and time-consuming. Titles to assets like automobiles and boats must be transferred over to the trustee. Deeds must be reissued in the trustee’s name. The same is true for bank accounts, stocks and investments.
- You’ll need a “pour-over will.” A pour-over will is a catch-all for your unfunded assets. Upon your passing, those assets are transferred into your revocable living trust.
Making the decision to create a revocable living trust can be a bit overwhelming. That’s why it is important that you understand the pros and cons before you set it up.