Benefits of a revocable living trust

By Ted Yates

The question is asked of me from time to time: "What is a revocable living trust?" It is an agreement a person makes that determines how a person's property is to be managed and distributed during their lifetime and also upon that person's death. It can be changed, amended, or revoked at any time. In Missouri, you can name yourself as trustee and retain full control over the trust property during your lifetime.

Revocable living trusts have often been recommended as a way to avoid probate, and they can indeed be used as a tool for that purpose. The trust document gives instructions for managing the trust assets and distributing those assets after the owner's death. The trustee or substitute trustees can carry out these instructions without the need for probate court proceedings.

However, a revocable living trust is not an adequate substitute for a will. It is simply the principal document of a well-prepared estate plan. A pour-over will should also accompany the trust. This type of will names the trust as a principal beneficiary. If any property is left out of the trust, the property will be transferred to the trust upon the grantor's death and distributed to the beneficiaries of the trust.

A revocable living trust is just one of the instruments needed in planning for incapacity and the management and distribution of property during one's lifetime, as well as upon death.

One of the reasons revocable living trusts are used to manage living people's assets is that property can be placed into or taken out of the trust easily. In addition, upon the death of the grantor, it can save time and money by avoiding probate costs and potential court proceedings. Also, the revocable living trust assures privacy since probate records are public records and available to anyone.

Revocable living trusts are completely private and no one can find out what type of property you have or how much property you have, or who you are leaving your property to upon your death.

The grantor of a living trust should consider also having a general power of attorney to be prepared at the same time as the trust document. While not within the scope of this article, a general durable power of attorney can be used to accomplish objectives that cannot be attained with a trust and to complement what is accomplished by a trust.

It is not true that a revocable living trust can save on estate taxes. The same results can be achieved by a will or by a revocable living trust. Careful planning with your tax adviser or attorney can reduce or possibly eliminate the amount of tax payable upon the grantor's death for estate tax purposes.

If you think a revocable living trust is the type of document you wish to have as a tool to manage and distribute your assets, contact your attorney or tax adviser.

Ted Yates is an attorney with Osburn, Hine, Kuntze & Yates LLC in Cape Girardeau.