Estate Planning | A revocable legal trust is a legal document that allows ownership of an individual’s assets. The grantor, or person who forms the trust, also serves as the trustee. A revocable living trust will cover three major phases of a person’s life: their lifetime, their incapacitation and what happens after their death. The key part being that the trustee can revoke
However, there are several misconceptions around revocable trusts and how they function. For example, many people think that revocable trusts will lower estate taxes. This is not true, as they mainly protect privacy and allow you to plan for disability. However, an AB Trust can reduce estate taxes.
Revocable trusts are often thought to be complicated to develop. This is not true, as revocable trusts are now a basic and established part of estate planning. A qualified elder law attorney can ensure that creating a revocable trust is a smooth process from start to finish.
There is also a misconception that revocable trusts are only required for people with lots of wealth. However, when deciding if a revocable trust is necessary, your net worth is really one of many factors that should be considered. Additional factors include children, real estate, or keeping your financial matters private after you die.
Lastly, many people think a revocable trust can protect you from creditors. However, this is false. This is because you still personally own the assets in the trust, and you can also change the terms of the trust at your whim. To fully protect your assets from creditors, you’ll need to also add a comprehensive asset protect plan.
If you are looking to establish a revocable trust, or have questions about how trusts work, contact Mortellaro law to ensure you’re speaking with an estate planning professional that can assist you with your needs.