Advantages Of Revocable Living Trusts - San Diego Estate Planning Attorneys

· What are the benefits of a revocable living trust?
Control, cost, convenience, and confidentiality are the four primary reasons that many people turn to trust-centered estate planning.
CONTROL A fully funded revocable living trust allows the trust maker to retain control of his or her estate planning affairs while avoiding probate and its related pitfalls.
Perhaps the most important attribute of a revocable living trust is that it allows the trust maker to retain control of his or her financial affairs even in the event of disability. Studies have shown that people are much more likely to experience a lengthy period of disability during their lifetime than they are to die suddenly without any period of disability. While a will has absolutely no effect until the will maker has died, a revocable living trust is effective as soon as it is executed by the trust maker. This means that the provisions of the trust can go into effect while the trust maker is alive, so he or she can plan for disability and other issues that may arise during life. Matters including who the successor trustees will be, how the trust maker’s medical expenses will be paid, and where the maker will live and what standard of living he or she will retain during the disability can be planned and will take effect immediately upon the trust maker’s disability without any need for a living probate. The people designated by the trust maker to handle such matters simply follow the directions that are included within the trust and supplemental documents, including the living will and durable powers of attorney for health care.
In the absence of proper planning, the trust maker’s wishes may remain unknown and decisions affecting the trust maker may be left to chance.
COST Because property that is held by a revocable living trust avoids probate, the cost of administering the trust estate after the maker’s death is much lower than the professional fees for administering that same property in the probate process.
With a revocable trust, there is no need to retain an attorney to steer the estate through probate. The directions to the successor trustees for the administration and distribution of the trust property are in the trust document. Of course, the successor trustees may seek the advice of an estate planning attorney and a knowledgeable accountant as needed, but in most cases the assistance required from professional advisors is minimal.
Further, trust estates avoid such costs as filing fees, newspaper publication costs, and other expenses associated with the required notices, hearings, and other procedures dictated by probate laws.
The fees and costs associated with administering an estate using a revocable living trust are nominal. A trustee’s fee is based upon the “going rate” of bank trust departments, and national surveys show that the average total cost of administering a revocable living trust estate is less than 1 percent of the gross value of the estate!
Let’s compare the costs of probate administration with those of trust administration for an estate of $200,000. On average, the costs associated with administering the probate estate equal $14,000, of which $6000 (3 percent of the gross estate) is the probate attorney’s fee, another $6000 is the executor’s fee, and the remaining $2000 (1 percent) covers the filing fee, publication costs, probate bond, appraisals, and other costs—a total of 7 percent of the gross estate. Now let’s suppose that the estate plan consists of a revocable living trust. The costs of administering the estate are now about $2000, or 1 percent. Use of the living trust eliminated the probate attorney’s fee, probate filing fee, publication costs, and probate bond and significantly reduced the executor’s fee.
Similarly, living probate proceedings are avoided with proper trust-centered estate planning in which health care agents are appointed and successor trustees are designated in the trust agreement. Living probate—related costs, including attorney fees, filing fees, costs of publication, and the like, are avoided, resulting in preservation of trust assets for the benefit of the trust maker.
CONVENIENCE While the results of administration of a probate estate or a trust estate are the same—taxes are paid and distributions are made to the beneficiaries—the probate process is cumbersome and time-consuming in comparison to the process of administering a trust estate. The trust maker’s specific directions within the trust document address the contingencies of disability and death and appoint successor trustees to carry out those directions.
Upon the disability or death of the trust maker, the successor trustees have legal control of the trust assets immediately, without involvement of any court, so the trust maker’s lifetime endeavors may be continued without interruption. If the trust maker was engaged in a business enterprise, the ability to continue its operations is generally critical to the health of the business. In addition, the successor trustees carry out the administration of the trust in a timely manner, whether by creating subtrusts for the benefit of the beneficiaries or by making immediate distributions.
CONFIDENTIALITY Trusts are private. While wills and the entire probate process are open to the public, trusts remain confidential. For many, this in itself is a compelling factor in favor of revocable living trusts.
Most of us have been reared to keep our financial matters private. It is unlikely that we would discuss our income or net worth with neighbors at a social gathering. However, if you die with a will controlling your affairs, all of your sensitive financial matters are at once open to public scrutiny. Your will and the accompanying inventory of your estate, the value of your assets, and your outstanding debts are all filed with the probate court in the county where you resided at death. Any-one, such as an intrusive neighbor or potential suitor for your business, can simply contact the court, forward a small check to cover the expense of photocopying your estate file, and receive copies of all papers filed in your estate.
Since fully funded trusts are not subject to the rules of the probate court, the inventories, notices to beneficiaries, and accountings of all assets and debts of your estate are not filed with the court and hence not open for public scrutiny.