All Families living in the U.S. may realize the many benefits of establishing a living trust
Regardless of where you reside, a revocable trust is a useful tool for estate planning that provides increased privacy for your family’s wealth and more efficiently transfers assets to future generations.
What is a Revocable Trust?
A revocable trust, often referred to as a “living trust,” is a trust that benefits the grantor during their lifetime. The assets in a revocable trust only transfer to its beneficiaries after the grantor has passed. As the grantor of a revocable trust, you are able to:
- Utilize the assets within the trust
- Distribute income earned to yourself
- Adjust the provisions of the trust
- Close the trust at any time
When you create a revocable trust, you must also name a trustee who will be responsible for managing the assets in your trust. In most cases, the grantor will name themselves as the trustee. You will also need to name a successor trustee to distribute the trust’s assets to your beneficiaries and to manage the remaining assets after your death.
Alliance Trust Company of Nevada is often named as successor trustee and charges no annual fees.
Which Scenarios Benefit the Most From a Revocable Trust?
A revocable trust can provide a variety of benefits that are favorable for families seeking a smooth wealth succession process and increased privacy.
The biggest factor that leads most people to form a revocable trust is avoiding the hassle of probate, which is notorious for its restrictive rules. Probate is also cost-prohibitive costing more than establishing a revocable trust.
Plus, probate can take up to several months before your loved ones actually gain access to your assets. For families with property in multiple states, the process is even more time-consuming because your loved ones must go through the necessary probate proceedings for each separate state in which the properties are located.
On the other hand, a revocable trust gives your beneficiaries faster access to your assets, saving them from undergoing tedious proceedings during an already difficult time.
Protecting the Privacy of Your Wealth Succession
Unlike probate, you are NOT required to file any public records regarding your revocable trust. Whereas, anyone can simply go to the public courthouse and look at all of the details in probate because it is public record.
Families in the U.S., as well as international families, often prefer to keep their assets and wealth succession private. A revocable trust ensures that your beneficiaries are protected from unwanted attention.
Avoiding Court-Supervised Guardianship or Conservatorship
In the event that you become mentally incapacitated, you can avoid a court-supervised guardianship or conservatorship because you will have already transferred your assets to the trust. At that point, the Disability Trustee that you assigned in your trust agreement will have the ability to take control of the trust without any court proceedings.
What are the Limitations of a Revocable Trust?
Revocable Trusts are widely-used and provide many benefits, but they also have a few drawbacks. It is always important to weigh your options when navigating your wealth planning strategy.
Alliance Trust Company of Nevada works with a network of local and national attorneys specializing in revocable trusts. We are happy and ready to refer you to attorneys in our network.
A Revocable Trust is Not Asset Protection
One of the key features of a revocable trust is that you maintain full use and benefit of the assets in your trust. However, the downside to enjoying full access, and the use of those assets, is that they are not fully protected from creditors. If asset protection is your top priority, you should look into a Nevada Asset Protection Trust.
A Revocable Trust Does Not Protect You From Estate Taxes
Fortunately, the state of Nevada does not have an inheritance tax. However, the federal government taxes estates valued over $5 million, or $10 million per couple, indexed for inflation.
What is the Difference Between a Revocable Trust and a Will?
Whether you decide to form a revocable trust or not, you will still need a will and testament. However, a revocable trust offers several advantages over a will alone.
The primary advantage is the ability to avoid probate, which is required when you only have a will and costs both time and money to complete. There are also potential tax advantages with certain types of trusts, depending on your unique situation.
Creating a revocable trust versus simply creating a will carries some disadvantages. The upfront costs of forming a trust may be slightly higher and it can be time-consuming to gather all of the necessary titles and paperwork when funding a trust. Also, the statute of limitations for contesting a revocable trust is longer than for contesting a will. Working with an experienced attorney is essential in assuring your revocable trust is correctly constructed.
Why Choose Alliance Trust Company of Nevada as Your Trustee?
Your trustee is responsible for overseeing your trust after your death. The various tasks assigned to your trustee can be powerful and quite complex.
In many cases, families opt to appoint their oldest child as the trustee by default. While that approach might seem like a good idea, it does not account for unforeseeable family disputes that may occur or the fact that they might not be the best candidate to assume the responsibilities as trustee.
Without the proper knowledge and experience, mismanagement on behalf of the trustee can lead to a poor outcome for the intended goals of your revocable trust. Plus, if your trustee is also a beneficiary, it can cause a conflict of interest that creates problems between your beneficiaries.
Hiring a professional trustee gives you the assurance that your revocable trust is managed successfully and that the trustee is a neutral party that serves the best interests of all beneficiaries.
Having a trustee located in the state of Nevada is especially advantageous if you are planning on using other trust strategies for asset protection, dynasty provisions, and increased privacy. While a revocable trust has similar strengths in every U.S. state, other tools for estate planning are significantly stronger when formed in Nevada.
Nevada has the best trust laws in the United States, which is why wealthy families from around the U.S. look to our state first for wealth management and asset protection.
Regardless of where in the U.S. you reside, it is wise to consider a revocable living trust to simplify your affairs after you pass. In some cases, an irrevocable trust established in Nevada may compliment your living trust providing excellent tax and asset protection benefits for your family for generations to come.