What Are the Benefits of Revocable Trusts?
At a certain point in life, many people find it necessary to decide how to dispose of property, money and portfolio holdings in the case of death or incapacity. Traditionally, a will governs the disposition of an estate after death, but only after death. A revocable trust serves as an agreement that legally holds and manages designated property or assets before or after death, according to the Missouri Bar. Revocable trusts offer several benefits over wills in managing the disposition of an estate.
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No Probate -- Part 1
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Wills and property not covered by a will or trust must undergo the probate process. According to the Oregon State Bar, the probate process entails the court overseeing the distribution of an estate. Revocable trusts do not require a probate process. This feature of revocable trusts can save significant time and money. This also allows the person setting up the trust to designate who receives what property or assets without court oversight.
No Probate -- Part 2
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Some individuals own property in multiple states, such as a summer cabin or rental properties. After a person dies, each state may require a separate probate process if a will designates the recipient of the property. Placing such properties into a revocable trust bypasses the multiple-probate problem for those with properties in multiple states, according to FindLaw. This can significantly reduce the legal expenses, since each probate hearing would likely require the family to employ a lawyer licensed to practice in each state to represent their interests.
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Enhanced Privacy
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A revocable trust provides enhanced privacy for those wishing to mask the extent of their assets or the total assets beneficiaries receive. As FindLaw reports, wills become part of public probate records and potentially accessible to anyone in the public. Revocable trust agreements can remain private. Instead of the court overseeing distribution, the trustee who manages the trust distributes any assets in accordance with the trust terms and without any need for public disclosure.
Guardianship
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The loss of competence to manage personal and financial affairs requires the court to appoint a person to serve as a guardian. The guardian primarily manages the incompetent person's finances, according to FindLaw. The revocable trust can include provisions to appoint a guardian in the event of incompetence or incapacity. This allows the family or relevant parties to avoid a court proceeding and minimize the disruption in the financial management of the affairs of the incompetent or incapacitated person.
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