If you don’t have a lot of assets you may wonder why you would ever need a trust. A revocable, or “living” trust can help solve a lot of problems. And the settlor, or creator, of a revocable trust can terminate or revoke the trust at any time and reclaim the assets that were placed into the trust. “So what’s the point?” you may ask.
Placing your assets into a revocable trust can help your survivors avoid the publicity, the expense, and the delay of probate. Wills, once probated, become matters of public record for everyone to see exactly what your assets were and exactly who inherited what. By placing your assets into a revocable trust, you maintain control over your assets while you are still alive. You can name yourself to be trustee and you can dispose of your assets as you see fit. Upon your death, however, your successor trustee can maintain your assets for the benefit of your intended beneficiaries or can distribute your assets to your intended beneficiaries outright according to the trust’s provisions without the intervention of a court, a court clerk, or a Commissioner of Accounts. While probate in Virginia is not overly burdensome, it does take time before a probate estate is finally closed and the decedent’s assets can be safely distributed. Beneficiaries dependent on the income of stocks, bonds, income-producing real estate, or other income-producing assets might suffer in the meantime.
A revocable trust also can help your survivors avoid the hassle of having to go through probate or other estate administration in more than one state. If you own real property or other assets in more than one state, your executor or administrator ordinarily would have to deal with your assets separately in each state. If the assets are all placed into your revocable trust, however, your trustee can avoid the whole process.
Perhaps most importantly, placing your assets into a revocable trust now can make your bequests less vulnerable to attack when you die. It is much more difficult for your potential heirs to prove that you lacked the capacity to create the trust, or that you were vulnerable to undue influence or fraud when you did so, than it is to make the same challenges to a will. It is also more difficult for your potential heirs to contest a revocable trust than to contest a will in which you favor one child or relative over another, make a substantial charitable gift, or make gifts to a companion or a partner in a relationship your family may not accept. In fact, potential heirs may not even be aware of your gifts to other beneficiaries, whereas they certainly would be if those gifts were made in a will.
Finally, placing your assets into a revocable trust with a provision for a successor trustee to take over management of the trust if you become incapacitated can keep your personal affairs private. Your trustee can manage your assets and provide for you. Without the protection of a trustee selected in advance, an incapacitated person can find himself subject to the humiliation of having a guardian or conservator appointed by the court to manage his affairs and a separate guardian-ad-litem appointed to advocate for his interests. Not only can this be embarrassing, but it is expensive. And the costs of the guardian or conservator and the guardian-ad-litem are all paid for by the very assets the incapacitated person needs to support himself or wants to pass on to his intended beneficiaries.
A revocable trust may not be appropriate for everyone. There are many circumstances, however, in which creating a revocable trust can be the best means of protecting yourself and your assets and making sure that your assets pass to the right beneficiaries. An experienced attorney can help you determine if you would benefit from such a trust.
Amanda Shaw is an attorney with Glenn Feldmann Darby & Goodlatte – visit www.gfdg.com to learn more.