The Estate Planning lawyers at the Elder & Disability Law Center provide comprehensive estate planning advice and legal services to individuals and families in the Washington, D.C. area, Maryland, and Virginia. Please contact us for a consultation, a revocable trust, or any other estate planning option.
A revocable trust is a written agreement between you and the trustee of the trust in which you agree to transfer your property into the trust for your benefit and the benefit of your heirs. You can be the trustee of your trust and continue to buy, sell, or lease any or all of your assets. In addition, you can change, amend, or revoke the trust at any time. Typically, you are treated as the owner of the trust; therefore, any income from the trust will be claimed on your income tax return.
Plan in Advance for Your Disability
A revocable trust is the most useful disability planning tool. Although we all hope to never be affected by a disability, the fact is that over 58% of people over 65 are disabled. Currently, the average lifespan for women and men in the U.S. is 80 and 75, respectively, so there is a chance that you or a loved one will become disabled.
The main advantage of a revocable trust is if the settlor of the trust becomes incapacitated, the successor trustee can continue to manage your assets contained in the trust without the need for a guardian or durable power of attorney (DPA). The revocable trust may be more convenient than the DPA, since all of the assets are already marshaled together into a trust with a trustee with pre-established oversight over the trust.
Avoid the Hassle of Probate
Another advantage to a revocable trust is the avoidance of probate. Assets titled in your individual name will be probated. Assets in a revocable trust are owned by the trust thereby allowing them to pass outside probate. Probate costs about 3-4% of the value of the probate assets and takes on average from 9 months to 2 years to complete, assuming there is no litigation or contested claims.
A benefit to avoiding probate is that your estate will be confidential. Since probate is a court proceeding, your will and the valuation of your assets become public record. A revocable trust does not pass through probate; therefore, your trust and distributions from the trust are confidential.
Is a Revocable Trust Right for Me?
There may be a benefit to probating your estate. The benefit to probate is that any creditors of your estate only have six months to make a claim against your estate. (This statute of limitations varies depending upon jurisdiction). After the six month creditor deadline has expired, creditors are barred from any further claims.
In addition, bear in mind that some assets in your estate may not even be subject to probate. The Uniform Nonprobate Transfers on Death Act (UNTDA) provides that various types of accounts, including bank accounts, life insurance policies, and deeds of gift do not pass through probate. These types of accounts can include a payable-on-death provision, which allows the assets to pass directly to the beneficiaries upon the death of the depositor or account holder. You may have accounts right now that do not need to go through probate because they fall under UNTDA. Speak to an experienced Estate Planning lawyer at the Elder & Disability Law Center to determine whether a revocable trust is right for you.