Think of your will as a letter to the court explaining your wishes for property distribution. A revocable trust is one of the easiest ways to pass property to heirs outside of probate, says a recent article from The News-Enterprise, “Revocable trusts provide flexibility in estate planning.” Revocable trusts are popular tools to avoid probate, protecting the decedent and beneficiaries.
Another benefit of revocable trusts? The trustee who manages the trust can work on their own timeline rather than worrying about meeting dates set by the court. In most cases, assets can be distributed much faster through a revocable trust than through a will. However, expediency isn’t always the main reason for a trust. Flexibility on timing is another benefit.
Revocable trusts can be held individually or jointly. This is usually determined by how assets are held before being placed in the trust. A joint trust is the more comfortable approach if all assets are owned jointly. Independent trusts usually work best for couples who prefer to keep assets separate.
Revocable trusts also offer several options for the distribution of property on the death of the first spouse.
The most commonly used option is the transfer of all property to the surviving spouse upon the first spouse’s death. All trust property remains in a “survivor’s trust,” which gives the surviving spouse all access and control, including the right to change beneficiaries. This works best for couples who have been married for a long time and share beneficiaries in common.
For blended families, another option is to split the trust assets upon the death of the first spouse between a survivor’s trust and a decedent’s trust. The surviving spouse retains full control over the survivor’s share of the trust property but becomes a beneficiary of the decedent’s trust. If the surviving spouse’s assets are insufficient, the decedent’s trust can be used for the benefit of the survivor. Nevertheless, the surviving spouse may not change the ultimate beneficiaries of the decedent’s trust.
Another option is to pass all assets completely outside of the control of the surviving spouse upon the first spouse’s death. Assets may pass into a family trust to benefit the spouse and other beneficiaries but at the discretion of a trustee. Alternatively, the assets may pass directly to residuary beneficiaries, with no assets left in trust for the surviving spouse.
This is often used when one spouse is unable to manage their own financial affairs or if one spouse is in a nursing home.
Planning should always be designed for the unique needs of each family. If the wish is to avoid probate and protect spouses and beneficiaries, revocable trusts offer many useful options.
Wills, trusts, and estate planning for everyone. To book a call in Anchorage, Alaska, please contact Mitch Wyatt at https://mkwyatt.com or call 907-277-0300.