While they are a common component of a solid estate plan, many people are not fully aware of what revocable living trusts actually do. Unlike wills, trusts go into effect immediately after they're signed, which means they're active while the signee is still alive, and with revocable trusts you are free to make changes as you see fit. If this seems like it would be a good estate planning option for you, Forbes offers the following information to help you decide.
Trusts Help You Avoid Probate
Probate is a costly and often lengthy legal process of proving your will when you die. Trusts are not subject to probate, which means your family can sidestep a lot of the hassle of the probate process. Additionally, trusts are relatively easy to fund. All you must do is transfer assets from your name to the name of the trust, which is known as funding the trust.
Trusts Protect You Against Incapacity
As stated above, as soon as a trust is created it goes into effect. This helps in the event you are rendered incapacitated by illness or injury. Your trustee will be able to manage your affairs while you're unable, unlike a will which will only go into effect once you die. This highlights the importance of choosing a good trustee, as this person will wield quite a bit of power over your estate.
Trusts Ensure Your Kids Are Well Cared-For
If you have young kids, a trust will allow you to plan for their care should you die prematurely. This is accomplished by setting up the trust so that the inheritance isn't provided until your child reaches a certain age. You can also opt to dole out inheritance amounts at several different ages, which prevents your child from spending all of the earnings before he or she reaches financial maturity.