revokable living trust

What exactly is a revokable living trust? What are the benefits of having this verses a regular will?

Terry Says:  I recently posted a full column on that subject, and will provide a link.  But basically a will gives instructions to distribute your assets. And the executor you name will go to court to have the approval to make those distributions.  When you create a revocable living trust, you name a successor trustee to carry out those same wishes at your death.  But since you have RENAMED/RETITLED all your assets in the name of your trust, there is no court approval required.

That approval process is called probate — and it takes a long time, perhaps a year — plus it is expensive (lawyer’s fees), AND it is public, since all court documents are open to the public.  With a revocable living trust, the  person you designate as successor trustee merely carries out your wishes to distribute the trust assets according to your instructions in the trust.

It is important that you retitle all your assets.  That does not trigger any tax consequences, and you can buy or sell those assets at any time and the resulting tax considerations go on your personal return while you are alive.  So instead of having your house in your name (or in joint name) you would title it in the name of the “john smith revocable living trust” or whatever you name your trust.

I know you will ask, so let me say that joint name will indeed pass your assets to your co-tenant without the probate procedure, BUT if your joint tenant becomes incapacitated (stroke, Alzeheimers, etc) you will have to get the permission of the court to do anything with the property!  Also, accounts with beneficiaries — life insurance, IRAs, 40l(k) accounts –do pass directly to the beneficiary, without going through probate.  So make sure you have current beneficiaries on all those types of accounts.

Here is the link:  http://www.huffingtonpost.com/terry-savage/death-deal-will-or-revoca_b_5863722.html