Having a well-drafted and comprehensive estate plan in place is the key to protecting your assets and your loved ones as well as ensuring that your wishes are honored during your lifetime and after you are gone. One of the most common additions to a successful estate plan is a Revocable Living Trust. To help you decide if a Revocable Living Trust is right for you, the attorneys at Legacy Care Law Firm explore what a Revocable Living Trust is, how it works, and the benefits it can provide to your New Hampshire estate plan.
What Is a Revocable Living Trust?
A Revocable Living Trust is a legal document created by the Grantor (the person establishing the trust) to hold and manage assets during their lifetime and distribute them after death. The trust is “revocable,” meaning the Grantor retains the ability to modify or revoke the trust at any time and for any reason – or for no reason at all. The Grantor typically serves as the initial Trustee and beneficiary which allows the Grantor to maintain control over the assets. One of the most important benefits to a RLT is the ability to name a Successor Trustee who can step in and take over the control and management of the trust upon the Grantor’s incapacity or death. This allows you to arrange for a seamless transition of control over important assets to someone of your choosing if you become incapacitated or after your death.
How Does a Revocable Living Trust Work?
When a Revocable Living Trust is established, the Grantor transfers ownership of their assets into the trust. This process, known as “funding the trust,” will involve different steps for different types of assets. For example, for real property it is necessary to transfer the title into the trust’s name. The assets held by the trust are then managed using the trust terms created by the Grantor. As the Grantor of the trust, you will retain control over the trust during your lifetime, meaning you can buy, sell, or use the assets just as you would if the trust did not exist. Upon the Grantor’s death, the Successor Trustee takes over, distributing the trust’s assets to the named beneficiaries without the need for probate, offering an important benefit to the beneficiaries and ensuring that the details of the distribution of assets remains private.
The Benefits of a Revocable Living Trust
While a Last Will and Testament remains the most common estate planning document and may forever serve as the cornerstone of your estate plan, a RLT is a very popular addition to an estate plan. One reason for the popularity of RLTs is that they are very flexible and can help achieve a variety of estate planning goals. Incorporating a Revocable Living Trust into your New Hampshire estate plan offers numerous benefits, including the following:
- Avoiding Probate: One of the primary benefits of a Revocable Living Trust is that it allows your estate to bypass the probate process. In New Hampshire, probate can be time-consuming and expensive, depending on the size and complexity of the estate. By transferring assets into a trust, you ensure they are distributed directly to your beneficiaries without court oversight, saving time and money and ensuring that your loved ones have access to assets as quickly as possible if you pass away unexpectedly.
- Ensuring Privacy: Unlike a Last Will and Testament, which becomes a public record during probate, a Revocable Living Trust remains private. As such, details relating to the type and value of your assets as well as the identities of your beneficiaries are not disclosed to the public, protecting your family’s privacy.
- Planning for Incapacity: A Revocable Living Trust is not only effective after death but also provides valuable protections during your lifetime. If you become incapacitated due to illness or injury, the Successor Trustee can step in to manage the trust’s assets on your behalf. This ensures that your financial affairs are handled without the need for involvement. In the absence of a RLT, your loved ones might need to petition a court to become the Conservator of your estate if you experience a period of incapacity.
- Simplifying Asset Management: With a Revocable Living Trust, you can consolidate your assets under a single management structure, making it easier to track and administer them. This is particularly beneficial for individuals with properties, investments, or accounts in multiple states, because the trust can eliminate the need for ancillary probate in other jurisdictions following your death.
- Providing Flexibility and Control: A Revocable Living Trust offers significant flexibility, allowing you to modify the trust’s terms, add or remove assets, and even revoke the trust entirely if your circumstances change. This level of control makes it an appealing option for those who want to retain authority over their estate plan during their lifetime while still planning for the possibility of incapacity and the inevitability of death.
- Protecting Beneficiaries: For beneficiaries who may be minors, have special needs, or struggle with financial management, a Revocable Living Trust allows you to specify how and when they will receive their inheritance. You can arrange for the distribution of assets at certain ages or milestones, require that a beneficiary successfully complete drug and alcohol rehabilitation, or encourage higher education by allowing for additional distributions if a beneficiary enrolls in college. All of these options allow you to ensure the funds held in the trust are used wisely.
- Avoiding Family Disputes: By clearly outlining your wishes and distributing assets through a trust you reduce the likelihood of conflicts among your heirs. A well-drafted trust minimizes ambiguities, making it harder for disgruntled family members to contest the distribution of your estate and provides the Trustee with a clearly stated purpose in case questions arise.
- Reducing Administrative Burden on Loved Ones: When you pass away, your family is often left to navigate complex administrative tasks during an emotionally challenging time. A Revocable Living Trust simplifies this process by providing clear instructions and avoiding probate, alleviating the burden on your loved ones.
Choosing the Right (Successor) Trustee
The choice of Trustee or Successor Trustee is a critical decision when establishing a Revocable Living Trust. The Trustee will manage and distribute the assets, so selecting someone trustworthy, capable, and familiar with your wishes is essential. If you are using the trust as an incapacity planning tool, you will likely choose a spouse, parent, adult child, or close friend to be your Successor Trustee. You may also wish to consider appointing a professional Trustee, such as a bank, law firm, or trust company, to ensure impartiality and expertise.
Is a Revocable Living Trust Right for You?
Deciding whether to incorporate a Revocable Living Trust into your New Hampshire estate plan depends on your individual circumstances and goals. While it certainly helps to familiarize yourself with the numerous benefits a RLT can offer, the ultimate decision to incorporate one into your estate plan should only be made after consulting with an experienced estate planning attorney.
Can We Help You Incorporate a Revocable Living Trust into Your New Hampshire Estate Plan?
For more information, please join us for an upcoming FREE seminar. If you are ready to create a Revocable Living Trust for your New Hampshire estate plan, contact our estate planning attorneys in our North Andover, Woburn, and Beverly offices at (978) 969-0331. Our Salem and Nashua, New Hampshire office can be reached at (603) 894-4141.
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