A revocable trust can be an outstanding estate planning tool under the right circumstances for people in California. You remain in control of your estate with a revocable trust, unlike an irrevocable one. There are other advantages and some disadvantages.
Advantages of a revocable trust
While people generally think of spending assets from a revocable trust after a person’s death, one of the advantages of a revocable trust is that they are available to you and for your care during your lifetime. When you die, there is no need for a probate court to decide what happens to your assets because you name a successor in the trust. This can be a huge cost-saving measure, and it ensures heirs follow your wishes. Furthermore, they can use cash and other assets in the trust to pay any estate taxes. Since the trust owns your assets, there is no interruption in money management following your death.
Disadvantages of a revocable trust
Unlike an irrevocable trust, there are no tax breaks for a revocable trust. Furthermore, creditors can generally not come after assets in an irrevocable trust during your lifetime and after, but they can in a revocable trust. Any assets not put into the trust must still go through probate court. The cost of creating a revocable trust may be slightly higher than with a will.
Setting up a revocable trust
After weighing the pros and cons of creating a revocable trust, if you decide to proceed, then you will transfer the title to the assets you want in the trust into the name of the trust. Then, name a trustee, which can be yourself. You will also want to name successors so that someone manages the trust after you become incapacitated or die.
Establishing a revocable trust may be smart but consider their disadvantages before acting.