A revocable trust is a separate legal entity that names another person or entity to administer trust assets, called the trustee. It is developed by creating a trust agreement or document that sets out the responsibilities of the trustee. It also names specific beneficiaries of income or assets in the trust. A revocable trust is one that can be canceled by the grantor (the person who made the trust) at any time or under certain conditions. It is in contrast to an irrevocable trust, which cannot be set aside absent very unusual circumstances.
Trusts are often used as a means to give money or property to others over time or if they meet certain conditions. Sometimes they are used as part of an estate plan, but not always. They are often used to hold real estate for the benefit of another person in Iowa.
The Benefits of Having a Revocable Trust
This unique entity is often created because the grantor wants to take advantage of the many benefits that trusts have to offer. Below are just a few examples of these benefits.
1. Continuing benefits if you become disabled or incapacitated
If others are counting on you to provide income or assets, you may wonder how you can provide for those loved ones if you suddenly become incapacitated. Having the assets in a trust, with instructions to another person to disperse funds, takes that uncertainty out of the equation. You know that your loved ones will still have those benefits even if you are not there to provide them physically or mentally.
2. Assets are not administered in your estate
A trust that continues after your death will keep the assets in the trust out of your estate. That means that they are not administered like your other assets—they can get special treatment, possibly avoid certain taxes, and do more than what your will may have established. This is a huge advantage for many people and often one of the main reasons that they create a revocable trust.
3. Designating (and Keeping) the same managers
You may name yourself or another individual as trustee of your trust. You can (and should) name a successor trustee to carry on this role should the initial trustee be unable to perform their responsibilities. For example, if you name yourself as an initial trustee, upon your death, the successor trustee steps in to fulfill responsibilities as outlined in the trust document.
4. Keep your estate assets private
When you have to open an estate, your assets can be public record. This can be a problem for some people who value their privacy. When your assets are in a trust, then only you, your beneficiaries, and the trustee see them. In some cases, you can even hide the assets from the recipients as well.
If you are considering which estate planning tools are right for you, contact Danilson Law. We can walk you through whether a revocable trust will be a good option for your unique situation. Call today to schedule an appointment.
