Estate Planning Tools: Revocable Living Trust
A Revocable Living Trust has become popular estate planning tool to pass property to heirs after you die and to avoid probate. Like a will, the trust is revocable so you can modify or eliminate it at any time.
The written trust agreement appoints a trustee to administer your property during your lifetime, and transfer it to your beneficiaries on your death. You can act as your own trustee during your lifetime, however, you should also appoint an alternative or successor trustee in case you die or become incapacitated.
The main advantages of a Revocable Living Trust are avoidance of probate and guardianship, privacy, and continuity of management of property after death or incapacity. It is especially useful for someone with assets in different states, because they can avoid probates in each state. It is also appropriate for an elderly single person, or a married couple with substantial separate property.
The main disadvantages of a Revocable Living Trust are the added cost of setting it up, the expense of administration, and the inconvenience of maintaining all assets in trust. Contrary to public opinion, a revocable living trust will not, by itself, avoid income, estate or gift taxes. While a Revocable Living Trust avoids probate, Washington’s probate procedure is one of the simplest and least expensive in the nation. There may be better ways to avoid probate, such as a Community Property Agreement or joint tenancy ownership. A revocable living trust can avoid the necessity of a guardianship, however, for many people, a Durable Power of Attorney is a simpler and less expensive alternative.