Increasingly, people are using revocable living trusts to pass on their assets to their beneficiaries. A big advantage of including assets like your home and other real estate, bank accounts and other high-value assets in a living trust is that this typically allows these assets to avoid having to go through probate. This helps them pass on to beneficiaries more quickly and easily than if they were distributed via the terms of a will.
Revocable living trusts aren’t as complicated as people often expect them to be. When established correctly, the person who sets up the trust (the trustee) can add assets, like a home, to it throughout their life simply by making sure the new asset is titled correctly. If a home is sold or a bank account is closed, it will no longer be an asset funding the trust.
After the person who established the trust passes away, their designated successor trustee is responsible for distributing the assets as instructed. Oftentimes, people name their executor as their successor trustee.
Why you still need a will
Even with a revocable living trust in place, you need to put a will in place as well. This is where you’ll designate administrators like your executor and (if applicable) a legal guardian for your children.
In cases where someone has set up a revocable living trust, they may benefit from setting up a specific kind of will called a pour-over will. It can include a simple clause that states that it will “pour over” any assets not specifically included in the trust so that they’re included in it upon their death. Assets that may be “poured over” can include anything from less valuable items like furniture or clothing to items you may not have gotten around to including in your trust or that you forgot you had.
Since anything included in a will (even a pour-over will) still needs to go through probate, your loved ones won’t be able to avoid it completely. However, smaller assets typically don’t require a long probate. You can also designate how you want any of these extraneous assets to be handled. By keeping your living trust current, you can avoid leaving valuable assets out of your trust, and out of probate as a result.
Your estate plan needs to meet your unique needs. By having experienced estate planning guidance, you can help to ensure that your plan includes the right documents so that your wishes are honored after you’re gone.
