Frequently Asked Questions About Revocable Trusts
Should I have a revocable trust to avoid probate?
You should have a trust only if you are older and only if you have substantial assets. Revocable trusts (also called living trusts or family trusts) have been oversold to the public by many lawyers. A revocable trust only controls assets transferred carefully into the trust. If this transfer process is not complete, the trust can be worthless. Call me to discuss if a trust is a good option for you. I have put together the following information on revocable trusts:
Revocable Living Trusts (also known as living trusts or family trusts) are often promoted as an effective alternative to probate for transferring property when you die. Even though Oregon’s probate system is among the simplest and least expensive in the nation, many citizens are attracted by the possibility of even quicker and easier asset transfers. But revocable living trusts have some drawbacks. Revocable trusts cost more than wills.
I have heard terrible things about probate.
Many people hear horror stories about the Probate Court process and are urged by friends and relatives to execute a trust. A trust is a complex legal document that can serve various purposes for various people. It is important to determine–on an individaul basis–whether a trust is an appropriate estate plan. To help you decide if a revocable living trust is right for you, here are answers to some of the most frequently asked questions about these trusts.
What is a revocable living trust?
A revocable living trust is a legal device that can be used to manage your property during your lifetime and to distribute your property after your death.
A revocable living trust is established by a written agreement or declaration, which appoints a “trustee” to administer the property transferred to the trust, and which gives detailed instructions on how the property is to be managed and eventually distributed. You should legally transfer substantially all of your property to the trustee. A revocable living trust agreement or declaration is longer and more complicated than a will, and the transfer of assets to the trustee can be time-consuming and expensive. Deeds, stock transfers, new bank accounts, and other legal documents will be necessary. Assets not transferred to the trustee will not be considered part of the trust and might still be subject to probate. You must also have a “pourover will” to ensure that any property not properly placed in your trust before death can be transferred to it after death.
Who can be the trustee?
In Oregon any competent adult can be the trustee, including the person setting up the trust. An Oregon bank or trust company can also act as trustee. Appointing a successor trustee is essential.
A revocable trust avoids probate.
Revocable trusts avoid probate because you transfer ownership of assets to the trustee before you die. The trustee then transfers your assets to your beneficiaries after your death without a probate. If you establish a trust but fail to transfer your assets to your trustee, you will not avoid probate.
If you die owning real estate outside of Oregon, a court proceeding might be required in each state where real estate is located. A revocable living trust can avoid these extra court proceedings only if that property is transferred to your trust.
Sometimes it is not a good idea to avoid probate.
For instance, in a probate your personal representative can limit the claims of creditors to a certain time period, and if they do not file their claims on time, their claims are invalid. However, if a trust is administered, creditor claims may not be time limited, unless a special court proceeding is started, which requires additional time and expense.
Be aware though that some of these non-probate devices can result in consequences relating to taxes, eligibility for public provided long-term care, and loss of independent control over an asset.
I have a large estate. Should I have a trust?
Spouses with large estates may create trusts for each other in order to minimize the estate tax paid to the government before their children receive their inheritance.
One size does not fit all.
Each family requires a customized estate plan. Revocable trusts are not for everyone. One size does not fit all. Call for a free phone consultation about your estate planning.