Anyone who is looking to avoid the probate process may wish to put their assets into a revocable trust. Like a will, a revocable trust can be amended to suit the needs of the person administering the trust. The advantages of a revocable trust in addition to avoiding probate include the ease of is administration as well as the lower cost of a revocable trust compared to an irrevocable trust.
For tax purposes, there is no difference between the individual and the trust as long as the grantor and the trustee are the same person. There is no need to apply for an identification number for the trust and money can be put into and taken out of the trust with no additional tax considerations.
Upon the death of the trustee, a designated successor trustee will be tasked with carrying out the wishes of the person who created the trust. It should have specific instructions for how assets are distributed. After the owner dies, heirs can receive assets quickly and creditors may not need to be notified of the death. As wills have to go through the probate process, it could take up to a year for assets to be distributed to heirs and a notice for creditors needs to be published in a newspaper.
A revocable trust may be worthwhile for those who have a modest amount of cash that they want to pass down in a private manner. Unlike probate, there is no public record of what happens to assets in a trust upon the passing of the individual who owned the trust property. This may reduce the odds of a person’s last wishes being challenged by family members or held up by creditors.
Source: The Valley Business Journal, “Use of a revocable trust for estate planning purposes“, Jack Brown, July 01, 2014
