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Revocable Living Trusts

In What Situations Is A Revocable Living Trust Particularly Useful?

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A condition which may become incapacitating

A Revocable Living Trust is one way of letting someone else manage your assets if you are no longer able to. However, this is not usually a primary reason to set up a living trust. If this is the main purpose for which you would establish such a trust, it may be wiser to execute a Durable Power of Attorney or appoint a Conservator. See Controlling Your Property While Incapacitated.

A substantial net worth

The wealthier you are, the more money you can save your heirs by avoiding probate. Probate costs are usually a percentage of your estate. See Estate Taxes, Probate.

If you want to disinherit one of your children or leave unequal amounts to your heirs

A living trust makes it difficult for an unhappy heir to contest your bequests.  If your estate goes through probate, your heirs will have the oportunity to appear in court and contest the terms of your will.   Plus any challenges become part of the public record.

If you own a business

If you own your own business, transferring ownership of the business to a Revocable Living Trust will allow the business to be managed by your trustee in the event of your incapacity or at your death. This helps preserve the value of the business.

Out-of-state property

If you own property out-of-state and leave it to someone in your Will, a separate probate process (called "ancillary probate") will be required in that state. Ancillary probate can raise the cost of distributing your property and eat into what your heirs receive. Ancillary probate can be avoided with the use of a living trust, and other probate-avoidance techniques such as the manner in which you hold title to an asset (for example, by joint tenancy with right of survivorship). See: How To Avoid Probate.

Anticipation of a Will contest

If there is a possibility that one of your heirs will contest what you want to do with your assets, it's more difficult to contest a trust than a Will. With a Will, as part of the probate procedure, the people who would receive your assets if there were no Will are informed of the submission of the document to probate. They're given an opportunity to challenge the document's validity at no cost to themselves. On the other hand, if your assets are in a trust, the same people would have to initiate a lawsuit at their own expense in order to attack the provisions of the trust. As an alternative to using a trust for this purpose, see How To Make Your Will Challenge Proof.

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