Although trusts are often considered to be the domain of the wealthy, everyday individuals in Brandon and Rankin County, MS rely upon them. Revocable trusts are an essential component of a comprehensive estate plan, offering a number of benefits with respect to probate, privacy, and more. You owe it to yourself and your family to thoughtfully consider these instruments among others that may make up your unique plan.
Turn to the trusted estate planning attorneys of Palmer & Slay, PLLC. Whether you have never created an estate plan or it has been a while since you’ve updated it, we can evaluate your specific circumstances and develop a plan that is customized to your exact needs and objectives.
What Is a Revocable Trust?
Also known as a living trust, a revocable trust is an instrument that allows its creator (the grantor) to efficiently manage and distribute their assets during their lifetime and upon their death. Property, money, and other assets are transferred into the trust so that it holds legal title for the benefit of third party beneficiaries.
What makes the trust “revocable” is that the grantor can alter or even revoke it. As with other types of trusts, a trustee is responsible for administering the revocable trust’s assets. The grantor can and often is the trustee, but they will typically name a successor trustee who will take over upon the death of the grantor/trustee.
Because of the special legal arrangement of a revocable trust, the grantor can move assets in and out of the trust at will during their lifetime. Upon the death of the grantor, the trustee or successor trustee will distribute assets to beneficiaries in accordance with the instructions in the trust. There are a number of reasons that an individual or family in Brandon and Rankin County, MS may choose to create a revocable trust to manage their property.
Advantages of Using a Revocable Trust
It’s a common misconception that only the rich have any business using a trust to take care of their assets and wealth. In reality, individuals from all walks of life throughout Mississippi use trusts – including revocable trusts – to strategically manage their property and plan their estates. These are a few possible reasons you should consider using these valuable tools as you decide the details of your own plan:
Probate avoidance
Trusts in general are useful for avoiding the costly and time-consuming process known as probate. Usually, when someone (the decedent) dies in Brandon or Rankin County, MS, that person’s estate must undergo probate to determine who inherits the decedent’s estate. This is typically done according to instructions left in a last will and testament or by way of the Mississippi intestacy statutes.
However, probate is long, complex, and costly. With a revocable trust, the trustee or successor trustee simply administers the trust assets and can forego probating them entirely.
Privacy
The probate process can expose a person’s estate to public scrutiny, which means that anyone can see who inherited a decedent’s assets. Because trusts are not subject to probate, they are kept out of court. All transactions, distributions, and other activities pertaining to the revocable trust are therefore kept private and confidential.
Flexibility
The flexibility of a revocable trust is unmatched, and it stems from the ability of the grantor to move assets in and out of the trust at will and up until the point of their death. The grantor can modify the trust to accommodate major life changes such as a divorce, remarriage, or the birth of a child. One particular use of the revocable trust is to allow the proper management of assets should the grantor become sick, disabled, or incapacitated.
Taxes
There are limited tax savings to revocable trusts because the assets will continue to be counted as part of the grantor’s estate. However, when the grantor passes away, the revocable trust assets typically get a step-up in basis to their fair market value as of the grantor’s death. In effect, this may reduce capital gains taxes if the trust sells off assets after the grantor dies.
Revocable Trusts Versus Other Instruments
A revocable trust should be considered along with other important estate planning tools. These are only two examples of alternatives and how they compare:
Last will and testament
Also known as a will, a last will and testament simply dictates how one’s assets will be distributed upon their death (which means, in turn, that it does not come into use until the testator – the person who makes the will – passes away). Conversely, revocable trusts can help a person strategically manage their property during their lifetime, including when they are sick or incapacitated, after which the property is distributed to beneficiaries. Property that is distributed through a will must undergo probate and will lack the privacy of a trust.
A will is usually less expensive to create than a trust, but it might be more costly to administer the property in the long run. Wills also lack the flexibility and adaptability of revocable trusts. On the other hand, a testator in Brandon & Rankin County, MS may use a will to name guardians of their minor children, a function that trusts do not provide.
Irrevocable trust
Unlike a revocable trust, an irrevocable trust cannot be amended or revoked during the grantor’s lifetime, which means it lacks the flexibility of a revocable trust. However, irrevocable trusts offer much greater protections from creditor claims because the assets are considered the property of the trust. Once property is transferred into an irrevocable trust, it cannot be taken back out.
This feature of irrevocable trusts also affords much greater tax benefits. Assets held in the irrevocable trust are not counted as part of the grantor’s taxable estate. Ultimately, this can help minimize or avoid estate taxes and it provides stronger asset protection than the revocable trust.
Contact Our Brandon & Rankin County, MS Revocable Trust Attorney
You deserve an estate plan that matches your values and helps you achieve your and your family’s goals. Find out how revocable trusts can play a vital role in that plan by working with our Mississippi estate planning attorney. You can call or contact us online today to get started.