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Is a revocable trust right for you?

Is a revocable trust right for you?

by Elizabeth Hunt, Partner

When it comes to estate planning, there are lots of options to help you best plan for the future. One is a revocable trust, which helps to manage the assets of the grantor throughout his or her life and smoothly transition the management of those assets upon the grantor’s incapacity or death.

A revocable trust typically provides instructions for what will happen when the grantor is:

  1. Alive and well
  2. Alive but incapacitated; and
  3. Deceased.

Many factors are involved in determining whether a revocable trust is indicated.

Benefits of a Revocable Trust

A common reason people say they want a revocable trust is to “avoid probate.” Many people have heard horror stories about the costs and delays associated with probate and want to minimize probate court supervision as much as possible. While probate can be a hassle in many jurisdictions, in Maine it is a relatively straightforward and user-friendly process. In addition, only assets held in the name of the trust will avoid probate, so only a trust fully funded during life will avoid probate altogether. Although Maine’s probate system is relatively inexpensive and efficient, if someone has property in other states, transferring such property to a revocable trust can avoid probate in those jurisdictions, which may be decidedly less user friendly.

Even with the relative ease of dealing with probate in our state, often the terms of an estate plan contain sensitive provisions regarding a client’s assets or loved ones that are best left out of the public eye. The probate process is generally a public one, with not just the contents of the will but details regarding the names and address of heirs and beneficiaries available online. Many people strongly wish to avoid or minimize probate due to privacy concerns through the use of a revocable trust.

Also important, many people prefer to use and fund revocable trusts during their lifetimes to provide streamlined and continuous asset management upon a person’s death or incapacity without the necessity of court involvement. By naming a successor trustee in a revocable trust and providing a clear mechanism for the trustee to accept the office, one may ensure that a fiduciary will be in place to deal with assets in such events instead of having to seek and wait for a court appointment.

Finally (notwithstanding our Power of Attorney statute), some banks and other institutions still occasionally engage in “pushback” when presented with a durable power of attorney for financial affairs, but these same institutions are more cooperative dealing with a successor or co-trustee.

Revocable trust myth: Some people are under the impression that the use of revocable trusts will reduce estate taxes or shield assets from creditors. It will do neither, although there often are planning techniques available to help advance those goals. Contact us to find out how Murray Plumb & Murray can help determine if a revocable trust is right for you.