How is a Revocable Trust like a Ziploc Bag?
This is not a riddle or a joke - just a helpful way to think about the way a Revocable Trust works. Also known as a “Living Trust,” a Revocable Trust is a written document that determines how your assets will be distributed to beneficiaries (the recipients) at your death. Because it is “living,” you create this plan during your lifetime, and you can change and adapt it as time goes on. Like a ziploc bag, it is a storage place. But in this case, it is a place to store assets like bank accounts, real estate, life insurance, retirement accounts, vehicles, patents, valuable collections and the like. Items can be removed or added. As long as you are living, you can adjust the provisions in the document.
Why would this be preferable to a Standard Will? It is a bit like “skipping the middle man” which is, in this case the Court System. When you die with only a Will, the Executor has to visit the court house, notify all interested parties, go through an intensive round of paperwork and perhaps pay huge fees in order to manage and distribute your properties. This court process called Probate can be enormously time-consuming and costly. For people who have assets in multiple states, this legal process will have to take place in multiple courts with varying fees and policies - a huge headache! With a Trust in place, the named executor simply takes over the proceedings of distribution without a court-driven process.
Another key reason to consider a Revocable Trust is to put in place your wishes for care and quality of life in the event that you are physically or mentally incapacitated. The Trust and its assets can continue to be managed by a Trustee during your lifetime—a trustee whom you have chosen. Without a plan in place, there can be difficult situations where a family member might have to visit probate court and demonstrate how incapacitated you are, perhaps leading to a court-appointed guardianship. These traumatic experiences are largely avoidable with good estate planning. With a trust, you can leave assets to care for your dog Otto, ask to remain in your own home, request that your sister be flown out to see you once a year - you can have your say!
If a Revocable Trust sounds interesting to you, you will want to start out with an inventory of your assets. Some of these will require contacting banks, insurance companies and transfer agents to update beneficiaries, issue new investment certificates, retitle cars, and sign new deeds. You will also want to consider who you would want to receive those assets and whom you would trust to manage the distribution as a Trustee.
Most importantly, you will need to find a trusted attorney who can make sure that you understand your options and establish an estate plan that realizes your wishes. The team at Hillsborough Wills & Trusts has the expertise to help you Build Your Circle of Security.