Every so often, a client will come in and announce that he or she needs a revocable trust. Typically the request stems from something the client has read in a book or article, or perhaps advice from a neighbor or friend. Of course, not everyone needs a revocable trust …
As revocable living trusts continue in popularity, many first-timers think that is the solution to their estate planning needs. Usually a friend or family member who has a trust will suggest it, or they may have read articles online suggesting everyone needs to have a revocable living trust. Being new to the estate planning world, they assume this is something they need too. The truth is that revocable living trusts are designed for particular estate planning situations. They are not necessary in every situation.
A recent article in Financial Planning titled “Does Your Client Need a Revocable Trust?” considered common situations that might call for a revocable living trust. The list includes:
- Probate Avoidance – If an estate might have issues in probate, a revocable living trust can be used to keep it out of probate. Not every estate will have issues with probate, however.
- Privacy Concerns – Wills are often subject to public scrutiny through the probate process. Because a trust does not go through probate, the details of an estate plan can be kept private.
- Second Marriages & Blended Families – Trusts can provide a way to ensure that assets go to a second wife first and that the remainder then goes to children of a first marriage, if that is the objective.
- Incapacity Planning – Trusts can provide a way for someone to manage your assets in the event you become too sick to do so yourself.
- Special Needs – If you have a relative with special needs, a trust can be used to provide for their care without jeopardizing their public assistance benefits.
Again, these are the primary reasons why you might want to have a revocable living trust as part of your estate plan. However, the important thing to remember is to go to an estate planning attorney's office with an open mind. Let the attorney tell you what the best options for your estate plan are.
Reference: Financial Planning (July 14, 2014) “Does Your Client Need a Revocable Trust?”