How Do You Know If You Need a Revocable Trust?

Trusts are a great way of protecting your assets and making sure that you’re able to have a say in what happens after you’re gone or incapacitated. Revocable trusts are one of the most popular types of trusts because they’re a little more flexible than the alternative (irrevocable trusts) and they become irrevocable after you die, meaning you get both flexibility and certainty.

But is a revocable trust right for you? Let’s talk through why you might want one.

Here are the top three reasons you might want a revocable trust:

#1: You want to be clear about who your beneficiaries are.

When you’re creating your trust, you’ll name your beneficiaries — aka the people who get your assets after you die. We encourage you to name core beneficiaries (the people you want to have “first dibs”) and contingent beneficiaries, who become the beneficiaries only if your core beneficiaries are not available.

A revocable trust allows you to clearly name your beneficiaries and list out the rules for how you want them to use whatever assets you leave them. And while you can name beneficiaries in other ways — for instance, by naming beneficiaries to your accounts or adding a person as a “joint tenant” on your real estate deed — these shortcuts won’t address what happens if your beneficiaries die before you. A revocable trust is a more stable way of reaching the same end.

#2: You value your privacy.

When you put your assets into a trust they’re hidden from the public court record, so when you do become unavailable, you won’t have to worry about the general public finding out all the details of your financial or property life. A revocable trust will help you keep everything private, with only certain people named by you having access to the information about what’s in the trust.

#3: You value efficiency, and you want to make the aftermath of your death easier to deal with.

If you die or become incapacitated, having a revocable trust set up in advance makes it very simple for a person you designate (called a trustee or trust manager) to come in and take over management of your financial affairs. Without the trust, that person will have to petition the probate court. This almost always results in time delays, and it can also be expensive. People who are involved in the probate (such as attorneys and the court-appointed appraiser) are authorized to receive a fee based on a percentage of the value of your assets. This can cause some tricky financial hurdles for your beneficiaries if, for instance, you have a valuable house but very little cash. In this case, your beneficiaries might not have the cash to pay the fees associated with probate unless they sell the house or borrow against it.

Long story short? Revocable trusts make it easy for you to set up a seamless transition in preparation for your unavailability.

Still have questions? We’re here to help. Contact us at hello@trustduet.com at any time.