With a properly prepared Revocable Living Trust, Pour Over Will, and careful asset titling, you can accomplish all of the things a Will can do, but you can also:
- Minimize court costs and relieve some emotional burden on your Executor by avoiding the court-proceeding known as “Probate” upon your death
- Specify in detail how your property will be administered if you become disabled during your lifetime
- Achieve a higher degree of privacy about your estate
A Revocable Living Trust is a trust set up during a person’s lifetime. A trust is a fiduciary relationship set up between three parties: a Grantor, a Beneficiary, and a Trustee.
A Grantor is a person who transfers assets to a Trustee to invest and manage for the benefit a Beneficiary. In a trust created for a minor child, a parent (grantor) will leave money to a trusted adult friend or family member (trustee) to manage the inheritance for the minor child (the beneficiary). In that example, all three parties are different people.
In the usual Revocable Living Trust arrangement, the Grantor, Beneficiary, and Trustee are the same person initially. John Doe might put all of his property in “The John Doe Trust,” and provide that he will be the only beneficiary until his death and the only trustee while his is able to serve. If he becomes disabled, he can appoint a backup Trustee to manage his Trust for him, but he remains the only beneficiary. When John eventually dies, his backup Trustee administers the trust for John’s post-death beneficiaries.
While there are some disadvantages to setting up a Revocable Living Trust, it can be a very effective estate planning tool.