A Revocable Living Trust is a very popular advanced estate planning document that acts as a vehicle to manage and protect your assets as you age and then distributes those assets after your passing. The vast majority of people who come to our office end up going this direction and drafting a Trust as their primary estate planning document. The Trustee (manager of the Trust) holds, manages, and distributes your Trust assets as directed by the terms of your Trust. You are usually the sole beneficiary and Trustee of your Trust during your lifetime and are free to use the Trust assets as you deem fit. You do not lose any control over your property by creating a Trust. After your passing, the Trust assets are then distributed per your directions as set forth in that document. The Trust is considered “revocable” as its terms can be amended, changed or revoked by you at any time prior to your incompetency or death. The Trust is also “living” because you make it during your lifetime. Most people create Trusts to avoid their assets being forced to go through Probate Court, thus reaping an enormous savings in Probate fees and costs. Please see the Probate Cost chart on the following page.
By drafting a Trust, you create a separate legal entity to hold your assets. During your lifetime, you are usually the trustee of your Trust and retain complete control over those assets. The Trust then provides your specific direction as to what happens to your assets after your passing. E.g., they are either distributed outright to beneficiaries or continue to be held in the Trust for a beneficiary (e.g., until they reach a certain age or upon the happening of a certain event). You decide how and when your assets will be distributed, and also decide who to appoint to manage your Trust assets should you be unable to handle that role on your own due to incapacity or death. We will extensively discuss your wishes during our initial meeting, our office will offer suggestions, and we will incorporate all of your decisions and wishes into your Trust.
There are two steps in the creation of a Trust. The first is the actual drafting, creation and signing of that Trust. Thereafter, the second step is transferring your assets into that Trust (the “funding” of your trust). Titled property such as bank accounts, stock accounts, real estate and the like must be retitled in the name of your Trust (again, you do not lose any control over your assets by doing so). This is usually not complicated or difficult and it takes little time to accomplish. Our office assists with the entire funding of your Trust, provides detailed instructions, and is there to painlessly guide you through this process.
If you are married, and hold most of your assets jointly, a single joint Trust may be appropriate for the both of you rather than two separate Trusts. This will be discussed in detail during our initial meeting. Trusts are no longer just for the “rich and famous,” but are now very common estate planning documents utilized by the average person. As set forth below, a Trust has many advantages over a simple Will that may tip the scales in favor of a Trust. It is up to you to ultimately decide whether a Trust is appropriate for you and your family, and our office is glad to assist you in that decision.
Advantages of a Revocable Living Trust
- Probate Avoidance. Probably the biggest advantage of a Trust, if properly drafted and funded, is that it will keep your estate out of Probate Court. Property owned by your Trust at the time of your death is not required to go through Probate Court, and thus won’t be subject to that 6-18 month cumbersome and expensive process. Knowing that your heirs will avoid the stress, aggravation and frustration of a complicated Probate Court process gives most people peace of mind and is the biggest factor that makes many people choose a Trust.
- Substantial Money Savings. Avoiding Probate Court usually results in substantial money savings for your estate (and thus your beneficiaries). The cost of administering a Trust after your death is usually much less than taking a Will through Probate Court. If you don’t have a Trust, and your estate is required to pass through Probate Court, the following Probate fees would usually be charged and deducted from your assets. The charges are based on the total value of assets needing to go through Probate Court (real estate, bank accounts, investments, retirement plans, cars, business ownership interest, etc.):
Value of Estate Probate Fees $50,000 $3,600 $100,000 $6,600 $200,000 $12,100 $300,000 $17,600 $400,000 $23,100 $500,000 $28,100 $600,000 $33,100 $700,000 $38,100 $800,000 $43,100 $900,000 $48,100 $1,000,000 $53,100 $2,000,000 $93,100 $3,000,000 $133,000 $4,000,000 $173,000 $5,000,000 $213,100
- Immediate Distribution of Assets Upon Death. A Trust allows property to pass to your heirs immediately upon your death rather than requiring them to wait the 6-18 months that it takes for non-trust assets to pass through Probate Court.
- Privacy. A Trust is a private document not open to the public. If you only have a Will, after your death, your Will is required to be filed with Probate Court along with a list of your assets. May of those documents are open to the public for inspection, including by nosey neighbors and scavenging sales people. A Trust is not filed with the court and is not a public document. In addition, a Trust, because of its privacy, may make it more difficult for disgruntled heirs and creditors to challenge the distribution of your assets.
- Tax Savings. Depending on the size of your estate, a Trust can be used to reduce or eliminate estate taxes.
- Asset Management Upon Incapacity. A Trust provides for continuity and back-up financial management during your lifetime, particularly in the event of your disability or incapacity. A Trust designates a person as the successor trustee to take over the management and administration of your Trust assets upon your incapacity. The successor trustee then assumes all of the administration powers that you held, including the ability to manage money, write checks, pay your bills, all on your behalf. While you are incapacitated, the successor trustee’s sole responsibility is to use your trust assets to provide for your needs. No distributions are usually made until after your passing.
- Avoid the Appointment of a Guardian or Conservator. A Trust may avoid the necessity of guardianship or conservatorship proceedings over you if you become incapacitated or disabled and are unable to manage your own financial affairs. As discussed in the previous paragraph, the successor trustee will assume control of your assets at that point in time and will manage them for your benefit as long as your incapacity lasts.
- Avoid Multiple State Court Proceedings. A Trust may avoid the necessity of ancillary probate proceedings in another state. If you own property in another state, that property may be subject to an additional, costly and inconvenient probate process in that other state. If the property is owned by your Trust at the time of your death, there is usually no need for such a process.
The best way to obtain additional information, and to decide what estate plan is proper for you, is to contact the Law Office of Christopher P. Cox, L.L.C. to discuss your particular situation.
We accept credit cards for your convenience. Contact our St Louis law firm today to schedule an appointment to learn how our legal expertise can help you achieve your goals. Attorney Chris Cox is conveniently located in Chesterfield, Missouri. Call us at 314.727.0163 or contact us online.