When you’re going through the estate planning process, you have a lot of options to consider. One such option is the revocable trust or living trust, which is a substitute for a traditional will. While some people choose such trust for excellent reasons, others do so because of revocable trust myths. Educate yourself about the myths surrounding revocable trusts, so that you can decide if it’s the right move for you.
Myth #1: A Revocable Trust Lowers Estate Taxes
This myth may sound plausible, but it’s not true. The assets within the living trust or revocable trust are subject to estate taxes just as they would be with a traditional will. However, there are other kinds of trusts that you can set up to reduce the amount of tax that your estate and heirs will pay. Ask your estate planning attorney about those alternatives instead of relying on a revocable trust to do the job.
Myth #2: A Revocable Trust Can Stay the Same for Years
Some people believe that once they set up a revocable trust, they never need to think about it again. This isn’t the case. Every few years, you should review the trust, including the conditions, the successor trustees, and the beneficiaries to make sure that your selections still fit your life situation and your purpose. Consult your lawyer periodically to talk about refreshing the revocable trust and keeping it effective.
Myth #3: A Revocable Trust is a Good Fit for Everyone
Every person’s situation is different. In certain states, estate administration requirements are very complicated and difficult, while in other states the estate administration is very expensive. In these situations, a living trust or revocable trust can work well. Revocable trusts also benefit single individuals, individuals who own real estate properties in multiple states or who have minor children who would need someone to oversee life insurance payouts or other benefits. Other than these scenarios, a revocable trust may not be necessary at all. Talk to your estate planning lawyer about your situation. Your attorney can offer you valuable advice about whether or not a revocable trust is right for your estate.
Myth #4: A Revocable Trust is Quicker to Administer than a Will
You may be hoping that a revocable trust will expedite the administration of your property. However, administering a revocable trust is usually not much quicker than probating a will. In fact, moving the will through probate court typically does not take as long as many people fear that it will. The remaining tasks associated with the administration of a will is nearly the same as it is for a revocable trust. So if you’re looking to save time and money, a revocable trust may or may not make that possible, depending on the condition of your estate and the laws of the state in which you live.
Myth #5: A Revocable Trust is Invisible to Creditors and the IRS
If you’re trying to squirrel away some funds where your creditors or Uncle Sam can’t access them, think again. A revocable trust may not fulfill that purpose; creditors and the IRS can gain access to your trust. Consult with your lawyer about other ways to protect your assets for your heirs.
Ultimately, creating an efficient estate plan is all about educating yourself. Search reliable websites for information, read some books or articles about estate planning, and think carefully about your goals for your estate. Before you make any moves on your own, talk to an experienced Maryland estate planning lawyer. With the lawyer’s help, you can craft an estate plan that offers the maximum benefit and ease of administration to your heirs.
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About Nicole K. White
After losing a close relative, Nicole witnessed the devastation, enormous expense and chaos caused by not having a simple estate plan. It is Nicole’s mission to educate parents, especially single parents, about protecting themselves, their families, minor children, and assets with comprehensive Estate Planning.