Some pros and cons of creating a revocable trust

On Behalf of | Apr 20, 2023 | Estate Planning |

You may have heard this estate planning component referred to as a living trust, inter vivos trust or revocable trust, but they all mean the same thing. A revocable living trust is powerful because you can modify or revoke it for any reason and at any time. You can even receive an income from your living trust.

Two questions you should consider asking an estate planning professional before creating a revocable trust are: What are the top advantages of living trusts? What are their potential drawbacks?

Benefits for you and your family

“Flexible” is a word many people use to describe revocable trusts. For example, you can add or remove beneficiaries whenever your family dynamics change (for example, via marriage, divorce and births).

Two more advantages of revocable trusts are the following:

  • The assets held in these trusts typically escape the probate process, benefiting your surviving family members.
  • By naming a successor trustee to take over (and follow your instructions) in case of an incapacitating injury or illness, you remain in control of your trust.

As mentioned, trust assets typically bypass probate, keeping your estate matters private and out of the public record. That’s a benefit many families appreciate.

Downsides to consider

Unfortunately, a revocable trust cannot protect your assets from estate and other tax burdens, and they can cost more than a simple will to create. Another potential drawback is that creditors may seize assets in a living trust because you—the trustmaker—still own the property.

As you can see, there is much to consider when choosing components to strengthen your estate plan and remain compliant with California laws. Experienced legal guidance can ensure that you choose wisely.