Revocable trusts have become a popular part of estate plans but for many the idea is still mysterious. One common misconception is that trusts are only for wealthy people but now with the current tax environment, wealth has very little to do with why trusts are created. Here are a few reasons why trusts have become so popular:
Substitute for Conservatorship. A Revocable Trust can serve as a substitute for conservatorship, avoiding the necessity of court proceeding and annual accountings if you become disabled. Your property can be handled by the person of your choosing and without the supervision (or protection) of the court.
Privacy. Unlike a Will, which is a public document, Trusts are private.
Transition Planning and Distribution of Assets. Revocable Trusts provide uninterrupted trust administration after your death. You have more control over how and when your assets will be distributed. Unlike other probate-avoidance devices, such as titling property jointly with right of survivorship or establishing payable on death accounts (insurance, IRAs, pensions, bank accounts), a Trust, like a Will, is more likely to preserve your intended plan of distribution.
Estate and Income Taxes. As a rule, Revocable Trusts are tax neutral and provide no tax savings over using a Will. If you are married however, any taxes owed at the first death can be deferred until after the death of the surviving spouse. With a Revocable Trust, the Settlor is taxed as if the Trust were not in existence. There is no requirement to obtain a taxpayer identification number or file a separate return for your trust.
So why not get started on planning for your family so you relax and enjoy the view! If you are interested in setting up an estate plan, call me today and set up an appointment! (714) 619-4145