Trusts are established to provide legal protection for a person’s assets, and to ensure those assets are distributed according to that person’s wishes. Depending on factors such as where you live and your estate planning goals, you might find a revocable living trust to be an ideal choice.
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A revocable living trust can be useful to avoid some complications that can arise from incapacity or probate. It's also an acceptable substitute for a will. Similar to a will, this type of trust directs how your assets will be distributed. Additionally, a revocable living trust adds an extra layer of privacy to these proceedings, as probate is public record. By avoiding probate, you keep your records private.
If you own property in multiple states, a revocable living trust can be used to avoid the need to file a separate probate in each of those states. Also, this trust provides more seamless management of assets when someone is incapacitated or no longer able to handle their own affairs.
A revocable living trust has its advantages. They include:
- Helping to minimize taxes or avoid probate
- Protecting assets from creditors
- Providing instructions for how to safeguard assets for your beneficiaries
They also have some disadvantages, including:
- The amount of time and money required to establish the trust
- Difficulty when establishing accounts or getting loans on trust owned assets
Important notes:
- It's a common misconception that if you're avoiding probate, you're avoiding an estate tax. Even though it protects against probate, a revocable living trust will not protect your assets from any estate taxes that need to be paid.
- A revocable living trust only controls assets named in the trust. Another potential (and common) misstep is failing to transfer ownership and titling of real estate, finances, or anything similar. If you don't follow up with this step, the trust will have no authority over those assets, making them subject to probate.
Questions? Reach out to one of our professionals at BECU Trust Services. We can answer any questions about the process and refer you to an attorney to draft your trust. Contact BECU Trust Services at 206-812-5176, or becutrust@becu.org.
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BECU Trust Services is a trade name used by Members® Trust Company under license from BECU. Trust services are provided by Members® Trust Company, a federal thrift regulated by the Office of the Comptroller of the Currency. This is for informational purposes only and is not intended to provide legal or tax advice regarding your situation. For legal or tax advice, please consult your attorney and/or accountant. Trust products not federally insured, not subject to credit union or affiliate guarantee, and may lose value.