The revocable trust seems to be a popular estate planning tool, but it does come with both strengths and weaknesses. Many people seem to believe that they need a trust in order to keep their money safe. Typically, such beliefs stem from something they have read on the Internet or heard from a friend. But of course, not everyone needs a revocable trust - an instrument that can be amended by the grantor during the grantor's lifetime. Here are a few situations in which a revocable trust could be beneficial:
1. Probate Avoidance
A main purpose of revocable trusts is to help avoid probate. The trust will dictate how assets are payable upon death. The probate process can be time-consuming and costly, making probate avoidance extremely appealing. Additionally, if you own land in more than one state, avoiding probate is important since separate probate is usually needed in each state. This could mean having to hire different attorneys is each state that the property is held.
Many people wish to keep their personal business affairs private. When a will is filed with the court upon death, it becomes public record and can be searched by the general public. However, the revocable trust will remain a private document.
3. Second Marriages
When dealing with blended families, the surviving spouse could have the ability to disinherit any stepchildren where a married couple has children from a previous marriage. The revocable trust works as a remedy to this problem, providing lifetime benefits to the surviving spouse but giving the assets to the children upon that the surviving spouse's death.
4. Business Continuity
A revocable trust will allow a co-trustee to have unrestricted access to the trust assets if the grantor were to be incapacitated. This affords the grantor the ability to identify someone to run his business should it ever come to that. If you were to die with a will as your estate instrument, the probate court would need to name a personal representative which can take weeks to accomplish. The revocable trust will allow the trustee to act for the business with little to no interruption.
5. Special Needs
If someone is receiving government benefits, a gift or inheritance might result in the denial of benefits. However, assets could be left in specific trusts to provide for supplemental needs which would allow the disabled person to continue receiving the benefits.