As you grow into an aspiring professional with goals of your own, you must ensure that you can manage your finances and protect your wealth. When you take your time to develop an estate plan, you help leverage these tools into your favor by reducing your estate taxes, avoiding probate and safeguarding your life’s legacy.
In this blog, we will discuss the pros and cons of a revocable living trust (RLT) and if this estate planning tool is right for you and your family.
What are the advantages of an RLT?
When you place your assets in an RLT, you help fast-track your asset distribution process for your chosen heirs. Since these assets already have designated beneficiaries, they can bypass the lengthy process of probate.
Your trust’s terms can also be personalized according to your wishes. For example, you want your youngest grandchild to inherit your vacation home, but only after they turn 30 years old. This condition helps ensure that they are already financially stable by the time they receive your property.
Because your living trust is “revocable”, this means that you get to be in control of your trust during your lifetime. You are free to amend your document’s terms, add more beneficiaries and/or appoint a secondary trustee at any time.
What are the disadvantages of an RLT?
When you establish an RLT, you will need professional guidance from a financial advisor and a lawyer. Depending on the complexity of your assets, the financial review and strategic planning phase may take a while and become expensive.
For instance, you and your estate planning lawyer must manually re-title every single asset that you want transferred to your RLT. Each property title change may also carry processing fees and have varying timelines.
Once your RLT has been created, you will need to monitor it on an annual basis to ensure that all necessary adjustments are made accordingly.
By weighing your options, you can make informed decisions about your estate
Since every person has their own set of goals for the future, a revocable living trust may not be a one-size-fits-all solution for everybody. By learning about an RLT’s advantages and disadvantages, you can weigh your options better and decide what is best for you and your family.
