The Advantages of Planning with a Revocable Living Trust For Virginia Homeowners
Virginia homeowners may use a Last Will & Testament (Will) to specify how they would like their property to be distributed after they die. But, a revocable living trust can accomplish the same objective with more individualized control, while saving your loved ones the time and expense of probate. Besides that, a revocable living trust is a great tool to plan for incapacity.
What is a Revocable Living Trust?
A trust is a legal agreement that can be used for estate planning purposes instead of a Will. When you create a trust and place all of your property into it, the trust, not your Will, dictates to whom and how the property you leave behind will be distributed.
A revocable living trust is a trust that is created during your lifetime and that can be amended, restated, or revoked as long as you are alive and competent.
For a revocable living trust to work, you must transfer the property you own into the trust. This means transferring title to the property from your name to the name of your trust. For example, from James Smith to The Smith Family Trust
Typically, you will act as the trustee of a revocable living trust that you create. This means that even though you have transferred ownership of your property to the trust, you remain in total control of it and you can withdraw or add property to and from the trust during your life, as you please.
Furthermore, you can name your spouse as co-trustee of your revocable living trust. Then, when one of you passes away, the surviving spouse will become the sole trustee.
Here are 5 major advantages of planning with a revocable living trust:
1. Probate Avoidance – Perhaps the biggest advantage of a revocable living trust is that the property held in the trust can pass to your beneficiaries without having to go through probate. Probate is the legal process by which a deceased person’s property is distributed to their heirs and beneficiaries after they die.
If you only have a Will in place when you pass away, your beneficiaries will have to go through probate court to gain ownership of any property that you owned in your own name when you died. It can take months, years, and even longer to transfer property to your beneficiaries through the probate process––the average probate takes over 18 months to complete.
Probate will also require your family to pay the necessary attorney’s fees and court costs and can ultimately cost tens of thousands of dollars. What’s more, multiple probate proceedings may be necessary if your estate includes property owned in more than one state.
By contrast, any property owned by your revocable living trust will bypass probate and can quickly be transferred to your beneficiaries after you pass away. This will save your beneficiaries time and money and eliminate the need to endure multiple probate proceedings when there is property owned in other states.
2. Privacy – Because probate is a public process, your private matters become public information. On the other hand, a revocable living trust doesn’t require any public disclosure. Consequently, a revocable living trust will not only save your loved ones the time and expense of probate, but will also maintain privacy with regard to family matters.
Probate vs. Revocable Living Trust: A Quick Comparison
| Probate | Revocable Living Trust |
|---|---|
| Can cost tens of thousands of dollars in probate fees | Can save your estate tens of thousands of dollars |
| Can take 18 months or more to transfer property | Property can be transferred in days, rather than months or years |
| A matter of public record. So, no privacy | Private family matters remain private |
3. Control – With a revocable living trust, the trust takes ownership of your property. However, as trustee, you retain control of the property and continue to manage it for the benefit of the trust beneficiaries while you are alive and able.
You also enjoy the advantage of being able to control the manner in which your property will be distributed. There are four fundamental ways in which you can arrange for distributions to be made from a revocable living trust to its beneficiaries:
- Outright distributions – typically a one-time, lump-sum distribution that a beneficiary is entitled to receive per the trust agreement;
- The trustee can use trust property to pay for the support of a beneficiary and then distribute the remaining principal to them once they satisfy a specified condition;
- The trust principal can be distributed to the beneficiaries at predetermined intervals after your death; or
- The beneficiaries can receive ongoing distributions from income earned by the trust property during their lifetime. Yet, the principle will continue to be owned by the trust for the benefit of future generations. This is often referred to as a legacy trust or charitable gift trust.
4. Providing for a Minor or a Loved One with Special Needs – Another reason for setting up a revocable living trust is to provide for a minor or a loved one with special needs. In your trust, you can appoint a guardian to look after any minor children you leave behind when you pass away. You can also dictate how trust funds should be used to care for your minor children, as well as, when and how they will inherit your property.
Furthermore, you can set up your revocable living trust to provide funds for the care of a loved one with special needs. This kind of trust is referred to as a special needs or supplemental needs trust and can provide the money needed to increase the individual’s quality of life, without risking their eligibility to receive much needed public benefits.
5. Incapacity Planning – In addition to giving you greater control and flexibility over the distribution of your estate after you die, a revocable living trust also gives you the ability to control what happens to your estate when you are alive, but incapacitated.
This is important because, with longer life expectancies today, it is more likely that you will become incapacitated (due to injury or illness) at some point or another during your lifetime. When this happens, who will manage your financial affairs?
Without proper planning, a court-appointed conservatorship may be required to appoint someone to manage your financial affairs for you. This could be someone who you would not approve of if you had your own say.
With a revocable living trust, however, you can avoid court intervention in the event you become incapacitated. This can be done by simply naming a successor trustee to manage your affairs when you die or become incapable of managing your own affairs.
Your successor trustee can be any relative, friend, or professional who is willing to take on the role and who you trust to successfully assume financial responsibility and control over the property in your revocable living trust.
Schedule A Free Consultation With Our Experienced Virginia Estate Planning Attorneys
To learn more about the advantages of estate planning with a revocable living trust, schedule a free consultation with Speedwell Law. We focus our practice on Virginia estate planning and trust law. We provide a no-cost, no-obligation consultation, where you can evaluate the benefits and costs and determine if a revocable living trust is a good fit for you and your family.
Contact our law firm at (703) 553-2577 or [email protected].
The information on this site is for general informational purposes only. The information presented in this site is not legal advice or a legal opinion. You should seek the advice of legal counsel of your choice before acting upon any of the information in this site.