According to a recent entrepreneur.com article, more than half of Americans do not have a plan in place for their estate after they die. Ostensibly, some percentage of those Americans probably live in Florida, and without a solid plan, the distribution of their assets will be left up to the courts. Although many instruments exist for estate planning purposes, many choose to create a revocable living trust, or RLT. An RLT can be just one part of a person's overall estate plan, and it can be a good choice for people to implement for several reasons.
First, if a person has minor children, an RLT can spell out the necessary provisions related to how, when and even if a child or children receive any part of their parent's estate. Among other things, an RLT can be structured so that an heir receives his or her part of the estate only after a certain age or under certain conditions. Likewise, if a person wants to totally disinherit a child, an RLT can specifically list who will receive what without the possibility of that heir later trying to claim assets to which he or she feels entitled.
Avoiding probate is another benefit of choosing an RLT. Individuals with considerable assets may find this particularly appealing. The probate process can be long, cumbersome, frustrating and expensive. To ensure one's most valuable assets are not tied up unnecessarily in the courts, property such as homes, businesses, investment accounts and life insurance annuities needs to be placed in the trust.
The final reason an RLT is advisable relates to estate taxes. The American Taxpayer Relief Act of 2012 increased estate tax exemptions and made it possible for married couples to create a bypass trust that will effectively double the amount they can bequeath to their heirs. While this is optimal for high-asset families, those with more modest means can also receive tax benefits and exemptions through using a trust.
An estate plan is important for anyone regardless of assets or income, and a revocable living trust offers advantages other estate instruments simply do not. You would need to consult with an experienced estate planning attorney if you are interested in how an RLT can work for them.