If we have heard “I don’t need a trust because I am not rich” once, we’ve heard it a million times. If each time were worth a dollar, we would have a big marketing budget to bust this myth. What is at the core of this misconception? That is hard to tell. What we do know is that a revocable living trust is an excellent estate and long-term planning solution for many.

First, what is a revocable living trust? These trusts are also known as grantor trusts. More on that later.  A trust is an agreement in which the Trustor or Grantor gives the right of ownership or control of an asset to another person, the Trustee, to hold, manage, and grow to benefit a third party known as the Beneficiary. A revocable living trust is created during the Grantor’s lifetime, which is amendable or revocable at the Grantor’s discretion.

Often these agreements see the Trustor serve as the Trustee, and the trust is at first for their benefit. This approach allows the individual creating this plan to maintain control of the assets. In doing so, they also give up a certain level of asset protection provided by an irrevocable trust, but they will ensure their assets avoid probate. (More on probate here.)

A revocable trust and probate savings are essential for certain assets. Think real estate, art, valuable collections, heirlooms, and business interests. All these assets could have potential high values but are cash poor at the time of probate, leaving loved ones to foot the bill. This approach also provides greater privacy than administering a probate estate.

There are downsides to this approach, however. A trust at its core is meant to protect and grow assets for beneficiaries. In this case, we are referring to protection from creditors, lawsuits, and other situations that could take or decrease your assets. Ironically, when it comes to trusts, control and protection are opposites. The more control the Trustor gives up over an asset, the greater the protection. So, for a revocable living trust where the Trustor is also the Trustee and Beneficiary, the assets in the trust might wind up subject to attachment.

We will address how to tackle asset protection with an irrevocable trust in a future post. In any event, the differences in asset protections show how important it is to discuss your desires with your estate planning attorney.

At The Skeen Firm, we take time to review your assets and listen to your planning goals so that we can deliver the best, custom-tailored plan for your situation. Call us at 724 – 550 – 6970 or email us at info@theskeenfirm.com to schedule a planning session. We aim to make the process easy; trust us!

*Disclaimer: the advice provided is for informational purposes and is not intended as legal advice.  It should not be relied on nor construed as creating an attorney-client relationship.