Our Kansas City Estate Planning Experts Can Help You Decide If a Living Trust Is Right For Yo
What is a Revocable Living Trust?
A Revocable Living Trust is a legal document that transfers ownership of property to a trustee. The trust is a legal entity that can hold property and is governed by specific laws. The trust has a set of instructions under which the trustee operates for the benefit of the beneficiary. Revocable living trusts are a common estate planning tool. A Trust can be as simple or as intricate as necessary to address your concerns and goals. There are two main types of trusts: revocable trusts and irrevocable trusts. A revocable trust can be changed or revoked by the grantor at any time, offering flexibility, while an irrevocable trust cannot be altered once established.
It is important to receive reliable legal advice and well drafted documents when creating your estate plan. Drafting these documents carefully is essential, and trust attorneys or a trusts lawyer can assist with this process. Attorneys and lawyers can help ensure that the trust and related documents, such as wills, are properly prepared and comply with relevant laws.
Comprehensive estate planning services should include medical directives, powers of attorney, and access to attorney services for guidance and support. We encourage you to consult with a trust lawyer for personalized advice and to discuss the full range of services available to protect your loved ones and your legacy.
People Involved in a Living Trust
Who is a settlor or trustmaker? This is the person who creates the trust and transfers personal assets into the trust.
Who is a trustee? The trustee holds legal title to property in the trust and follows the trust instructions for the benefit of the beneficiaries of the trust. Trustees are granted specific powers under the trust agreement, which determine their authority to manage, modify, or distribute trust assets according to the terms of the trust. This is you during your lifetime while you are in good health. Many times, the person who is creating the living trust is also the trustee while they are in good health. The trustee can change to a trusted family member, friend, or a financial institution if you lack mental capacity or upon your passing.
Who is a beneficiary? A beneficiary is a person entitled to property or income from the trust. Beneficiaries can include families, friends, or charities, and trusts are often used to help manage a family’s assets and address their specific needs. Many times, the person who is creating the living trust is the beneficiary of the trust during their lifetime (you are the trustee and beneficiary). The trust provides for the distribution of assets to beneficiaries according to the trust instructions. The beneficiaries of the trust will change over time as the settlors or trustmakers pass away.
Benefits of a Living Trust
Living trusts offer many advantages for estate planning, including privacy, flexibility, and efficient management of estate assets and trust assets.
Incapacity planning – the Trust will help protect you during your lifetime. Your backup trustee can step in once you no longer want to handle your finances and property or if your mental or physical health declines. The trustee can handle the property in the trust without relying on power of attorney documents, this results in a seamless transfer. Trust administration is an important service provided to ensure proper management of your trust if you become incapacitated.
Flexibility – You can move property into and out of the Trust as you like. You have complete control of the assets in the Trust while you are alive and well. You can change or revoke the Trust, and the powers granted to the trustee can be tailored to your needs.
Avoid probate – Property that has been transferred into the Trust will avoid probate court. Probate court is the process by which estate assets are transferred under a Will or if a person died without a Will.
Three common reasons some people want to avoid probate court:
- Public A probate case is a public court case. If someone pulls up a probate case, they can review the Will filed with the court. The Will states who receives property. The public will know who received the property and how much was received. This is often worrisome for people with minor children.
- Costs A probate case can cost thousands of dollars once court fees, publication fees, attorney fees, and executor fees are paid. Many times, property estate planning to avoid probate will cost less than probate. Probate costs will reduce the amount of money that goes to the family. The costs of a probate case will increase if there is real estate, lots of accounts, family members that are hard to find, family disputes, or an executor needs more assistance during the process.
- Time A probate case is a court case, and that means it will take time. A probate case can easily take 6-12 months depending on when the Will is filed with the court. If real estate is involved it can take closer to 18 months to complete the transfer of estate assets and complete the probate process. During this time, probate can be time consuming and can limit access to assets for loved ones. This concerns parents with minor children who intend for assets to be available for their children’s care.
Smooth transfer of assets to the beneficiaries as no court process is required. The trustee will take the necessary steps to follow the Trust instructions to transfer the trust assets. Proper trust administration ensures that trust assets are managed and distributed according to your wishes after death.
Privacy is maintained since the Trust is a private document and only people with a direct interest in the Trust have the right to know of the trust assets.
Protect beneficiaries’ inheritance from their creditors, divorce, bankruptcy, lawsuits, or people looking to take advantage of the family member or friend. A Trust can also ensure beneficiaries receiving public benefits do not lose their benefits. Special needs trusts are available to help cover expenses and preserve government benefits for loved ones with disabilities. A Trust can also allow you to direct when beneficiaries receive property, such as once my child reaches 25 years old, they can receive their inheritance in full.
Tax planning – Trusts can assist with tax planning issues when estates reach the federal tax exclusion. Currently the exclusion is $13.61 million for an individual and $27.22 for married couples. These numbers are set to decrease in 2026 depending on the actions Congress takes. As part of trust administration, it is important to file all required tax returns for the trust and estate.
It is essential to fund the trust properly to ensure all estate assets are included and managed as trust assets. Trusts can also be used for investment management and business succession planning, providing additional flexibility and control.
What is Trust Funding?
Trust funding refers to the process of moving your assets into the Trust, also known as funding the trust. You can fund the Trust by retitling the assets into the name of the Trust. Proper funding ensures the correct distribution of assets according to the terms of the trust, allowing for a smoother and more private distribution compared to probate. Trust funding is a crucial step to achieving the benefits of a Living Trust. After funding, trust administration is necessary to manage and distribute the assets as specified in the trust.
Is a Living Trust Right for You?
Should a Revocable Living Trust be part of your estate plan? No simple guidelines exist to answer that question. People with various levels of wealth and in different circumstances may, or may not, find a Revocable Living Trust useful. Our law firm provides estate planning services in Missouri, helping clients navigate state-specific probate laws and trust options. We offer a comprehensive range of services, including estate planning, probate, trusts, and dispute resolution. Let’s talk.
Allow the Bloom Legal Advisors to help you determine the best approach for your individual needs by scheduling your virtual or phone meeting today. Consult with us for attorney services related to estate planning and receive personalized legal support.
Allow the Bloom Legal Advisors to help you determine the best approach for your individual needs by scheduling your virtual or phone meeting today.
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Living Trust Lawyer – Frequently Asked Questions (FAQ)
