Revocable Living Trusts
Trusts can be as simple or as complex as they need to be to accomplish various objectives. Revocable living trusts are "revocable" in the sense that they can be revoked or undone. For federal tax purposes, assets within revocable trusts are included in the settlor's ("trust maker's") gross estate. This is essentially because the settlor has the ability to take their property back out of the trust at any time, usually without restriction. Irrevocable trusts, on the other hand, are trusts which cannot be undone. Once the settlor transfers their property into the trust, they cannot take it back.
Revocable living trusts, or "inter vivos trusts" as lawyers call them, are helpful in estate planning because they do not go through probate. Probate is the court process by which a will is proven valid in court. Revocable living trusts are an alternative to wills, so they bypass the probate process. Therefore, using a revocable living trust can drastically reduce or even completely avoid probate costs. Probate and estate administration can eat up to 25% of an estate in some cases - that's money and assets that loved ones won't get.
There are companies out there that offer quick, cheap revocable living trusts. They market to people who are looking for a deal, and they provide terrible products that have not been drafted by attorneys licensed within their customers' jurisdictions. At Barber Power Law Group, our experienced estate planning attorneys draft each estate planning document, including revocable living trusts, by hand to ensure that our clients' objectives are accomplished. We seek to maximize our clients' legacy while minimizing taxes on their estates.
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