Revocable Living Trusts

A revocable living trust allows you to put terms and conditions in place. You can place age intervals for inheritance, such as distributions at age 25, 30, and 35. You can create restrictions for receiving money, such marrying within your religious beliefs. You can make sure all your children get through college before equally dividing the remainder of your estate. Wills only allow for one-time, lump sum distributions with no strings attached.

As divorce rates have increased over time, more clients are opting to keep their life’s investments in trust for a longer period, even up to the child’s lifetime. This protects your child’s inheritance from a possible ex-spouse or creditor. 

If your surviving spouse inherits all of your life’s investments, then your assets are exposed to remarriage. In the event your surviving spouse remarries, you can require a prenuptial agreement as a condition of receiving money. You probably do not want your wife’s new 30-year-old husband to buy a Porsche with your hard-earned money, and a revocable living trust can prevent exactly that. 

If you have children from a prior marriage and then remarry, you might have a will in place that leaves your entire estate to your new spouse. If that is the case, nothing can stop your new spouse from creating his or her own will after you die, leaving the entire estate to their own biological children. This is a big fear for many of our clients who have blended families. A revocable living trust can prevent this from happening by making a portion of the estate irrevocable. 

If you believe there will be challenges to your estate plan after you die, then a revocable living trust can reduce this risk. A trust does not pass through court and remains private. If someone is excluded in your trust, they are not privy to the details. You can add language in your trust to further discourage contests, such as a forfeiture clause. 

If you own real estate in multiple states, then when you pass away, your estate needs to be opened in each of those states where the property sits. The same goes for financial accounts that do not have branches in your home state. This process is called ancillary probate. Ancillary probate is an additional administrative cost to your estate, netting less money to your loved ones. If you move your real estate into a revocable living trust, you can avoid time-consuming and confusing ancillary probate.

Did you know that non-U.S. citizens can only pass $60,000 tax-free upon their death? Thereafter, non-U.S. citizens face taxes of up to 40% on their estate. By setting up a Qualified Domestic Trust (“QDOT”), non-U.S. citizens can avoid these oppressive taxes. 

Those suffering from Alzheimer’s or dementia may require additional financial oversight. A revocable living trust allows the family to seamlessly step in. Setting up a revocable living trust while you still have capacity allows you to retain control and create an easy transition plan should your mental health decline down the road.