Have trouble understanding this thing called a ‘revocable trust’ and what it will do for you? Let’s find out!
A revocable trust is an estate planning tool that allows the grantor to take back certain rights conferred to the grantee of their gift during their lifetime. It is typically used for asset protection and estate planning. A ‘revocable trust’ is still a trust, but it’s a special type of trust that allows you to take back control over assets that are given through a trust document. Both irrevocable and revocable trusts can be created during one’s lifetime. You can click here for more information on different types of trusts.
For now, let us see into the main benefits of revocable trusts.
Continuity of management
One will find that a revocable trust allows for continuity of management of the assets. That’s because, no matter how irrevocable the trust is, you can always take back control over your assets during your lifetime.
A revocable trust will limit the costs and tax burden of an estate’s administration. It eliminates the estate tax, since only assets that are left over after the grantor’s death will have to be distributed to heirs using special rules.
Availability of assets at death
This is on the basis of a revocable trust. The grantor can give gifts to other beneficiaries during their lifetime, who then form a trust. And the assets held in this trust will be available to the beneficiaries upon the grantor’s death. This is a much better option than leaving assets to the beneficiaries outright, as they will be exposed to potential charges of self-dealing under the trustee’s discretion.
Ease of administration of new or continuing assets
With revocable trusts, the grantor can use assets, which were not included in the original trust, at any time. The assets are still subject to the gifts made by the grantor during their lifetime. This kind of gift gives more flexibility to the grantor in managing their assets as conditions change and permits them to add or remove beneficiaries.
No interruption in investment management
The new trust document allows the grantor to continue to hold their assets and lets them continue to be managed by the trust advisor. This provides reassurance to the grantor of not having to disrupt their investment approach as they get older.