When engaged in estate planning, individuals and couples often explore a very wide range of options. While typically they will work with professionals to do the planning, it can help to have some knowledge about the options before discussing them. One option is a trust.
Most people are familiar with the basics of a will but aren't completely sure about the specifics of trusts. A will, of course, is a basic estate planning document with the primary function of designating which assets will go to whom. Those assets can include homes, businesses, money and much more.
Whether a revocable trust is additionally a good instrument to be used in your estate depends on what you want. There are specific conditions in which it can be a very good idea. One is if you want to avoid probate.
Avoiding probate by instituting a trust will work as long as the trust is fully funded. To ensure that, you should have the beneficiary designations for things like retirement accounts and insurance policies are in order. If the assets a trust administers have been fully transferred to the trust, you can avoid probate.
Revocable trusts can also be very useful if some of the property you want your heirs to have is out-of-state. If that property was only addressed in your will, your heirs would have to deal with probate proceedings based in the state where the property was as well as the state where the remainder of the estate is based. With a revocable trust, you can avoid that complication on their behalf.
These are some of the considerations for revocable trusts. Understanding the benefits they provide can be of tremendous value to anyone engaged in estate planning.
Source: My Progress, "Is a Trust Better Than a Will?" Jeffrey J. McKenna and vrobison, Feb. 25, 2015