Law Offices of Joan Grimes

Why You Need a Revocable Living Trust

Over the years, I have written a lot of articles for the Monthly Grapevine. My goal in writing these articles has been to cover more complex estate planning issues. However, I realize some of you may be new to my articles. I often meet with clients who admit they were too embarrassed to ask: “what is a revocable living trust and why do I need one?” And my favorite question is: “why did my parents not have a trust?” These are excellent questions!
First, your parents may not have had a trust, but rather had a simple Will. Several decades ago, this was fine! After their passing, their Will was probated and the assets were distributed to their beneficiaries. However, today the process of probating a Will in court has become extremely time consuming and expensive.
Second, what is a Revocable Living Trust (“RLT”)? A RLT is a legal instrument that serves two important purposes: 1) the RLT controls how your assets are used and managed if you experience a period of incapacity prior to death; and 2) the RLT indicates how your assets will be distributed following your death without court supervision.
RLTs are called “living” because they are created and funded (ie your assets are transferred to your trust) while you are alive. RLTs are “revocable” because you may amend or revoke it at any time prior to your incapacity or death. Your RLT can be amended at any time to update the terms. You should review the terms of your trust regularly and should consider amending the terms following a divorce, marriage, death of a beneficiary or a significant change in your financial situation.
After funding your trust, you still have complete control and ownership over your trust assets. You can sell, gift or encumber all trust property. Assets in a RLT are treated the same as direct ownership of property for income tax purposes. There are no additional taxes, tax returns or any necessity for separate tax payer identification.
Today, seniors are living longer than ever before. With medical advances, doctors are able to keep our bodies alive longer. Sadly, seniors sometimes “outlive” their minds. If you experience a period of incapacity, your RLT will indicate how your assets are to be managed during this time without court supervision. Your RLT will also indicate how you wish to be cared for.
Many people are concerned about the cost of establishing a RLT. We often hear people say, “RLTs are only for the wealthy.” This is unfortunately a common misconception. For most people, a RLT is an affordable option, especially when compared to the high cost of probate fees in California.
While the RLT the foundation to a good estate plan, you also need several other critical documents including: power of attorney, advance health care directive, and HIPAA authorization.

This article provides only general legal information, and not specific legal advice. Information contained is not a substitute for a personal consultation with an attorney. © 2016 Joan Grimes.
Law Offices of Joan Grimes can be reached at 925-939-1680 or visit www. lawofficeofjoangrimes.com. Offices in Brentwood & Walnut Creek.