Are Revocable Trusts Overrated?
Financial planners advertise revocable trusts as though they are an aspirational product, and they are beneficial to people who establish them for the right reasons. If you are setting up a revocable trust because someone told you that all the financially savvy people are doing it, or because a financial planner offered it to you as part of a package deal, then you probably don’t need one. Not everyone needs a revocable trust, just like not everyone needs Botox or a car that can park itself. Setting up a revocable trust to impress people is a terrible idea, especially since very few people will ever know that you have it. If your goal is to show off, you should spend the money on jewelry, a fast car, or travel where you photograph every moment of your trip and post it on social media. Likewise, if your goal is to save money and to simplify probate, a revocable trust may not give you enough benefit for it to be worth the time and money it takes to set it up. To find out whether a revocable trust is right for you, contact a Washington, D.C. estate planning lawyer.
Revocable Trusts Are Not the Only Way to Pass Assets to Your Family Members Without Going Through Probate
Reducing the value of your estate, meaning your property that goes through probate before passing to your heirs, is a sound estate planning strategy. Revocable trusts are just one of many non-probate assets. There are also other ways to keep assets out of probate, some of which require less effort than establishing a revocable trust and funding it. These are some easier ways to keep assets out of probate, and you are probably already doing some of them:
- Property that you own jointly with your spouse does not go through probate; your spouse simply becomes sole owner of your jointly owned assets.
- You can add a family member as a payable on death (POD) beneficiary of a bank account.
- If you own investment accounts, you can add a family member as a transfer on death (TOD) beneficiary.
- It is possible to transfer real estate properties or other assets to a family member while you are alive. If you do this, the assets will no longer belong to you, so they will not become part of your estate.
Revocable Trusts Do Not Make Their Assets Invisible to the IRS
Assets in an irrevocable trust do not legally belong to the grantor; they belong to the trust, so the grantor does not pay taxes on them. This is not the case with a revocable trust. You are still personally responsible for the taxes on the assets in your revocable trust; a revocable trust does not get any tax benefits until after the testator dies, because at that point, it becomes irrevocable.
Contact Tobin O’Connor Ewing About Revocable Trusts
A Washington, D.C. estate planning attorney can help you establish a revocable trust or decide that you do not need one. Contact Tobin, O’Connor, and Ewing in Washington, D.C. or call 202-362-5900.
Source:
msn.com/en-us/money/other/four-reasons-you-don-t-need-a-revocable-trust/ar-AA1gHQU6?ocid=msedgntp&pc=ACTS&cvid=397d97c93a0a494eb773623ab853cc93&ei=38