Law Offices Of Thomas Sciacca, PLLC

Categories
Blog Revocable Trust Trusts

What is a Revocable Trust and is it Appropriate for Me?

What is a Revocable Trust and is it Appropriate for Me? by Tom Sciacca

{Read in: 3:30 minutes} What is a Trust, and more specifically, what is a Revocable Trust? Creating a Revocable Trust is like creating a new legal entity. This Trust is created by a Grantor and managed by several people known as Trustees. In its simplest form, a Revocable Trust is a Will substitute that avoids probate. Because of this, a Revocable Trust would be appropriate in several different situations:

-If you know that one of your children will likely contest your Will when you die, creating a Revocable Trust makes it significantly more difficult, procedurally, for that child to challenge your estate plan. Instead of waiting to receive notice of a probate proceeding, the child would need to retain his or her own attorney and start an affirmative proceeding, which involves substantial legal and filing fees. However, this advantage will not completely derail a motivated person from mounting a challenge, as there is no such thing as an iron-clad estate plan.

-If you have no known living immediate family members (likely to slow the probate process down considerably), it may be wise to create a Revocable Trust. For example, perhaps you are an only child and have no relationship with your extended family. In this situation, because your Executor is unable to identify your next-of-kin, your Executor may need to hire a genealogist, costing the Estate thousands of dollars and delaying probate by weeks or even months. If the genealogist cannot identify the next-of-kin, the court may require that your Executor publish a notice, asking for next-of-kin to come forward—another expensive proposition.

-If a family member has an intellectual disability, is a minor, or is incarcerated, it may be best to create a Revocable Trust. In any of these circumstances, the Court will appoint a Guardian Ad Litem to protect the interests of these people during the probate proceeding. While many Guardians Ad Litem make every effort to work expeditiously, it is possible that this process could cause undue delay and expense. As well, the Guardian Ad Litem might challenge the documents on behalf these people, leading to significant litigation costs and delay.

-Perhaps the most common reason that someone might want a Revocable Trust is for asset management. Some people think of a Revocable Trust as a “Super Power of Attorney.” If the Trustee can manage the Trust, there’s almost no need to have a Power of Attorney. As an aside, I (and likely most other lawyers) would recommend both a Power of Attorney and a Revocable Trust, as there are certain things that an Agent under Power of Attorney might need to do that only tangentially relate to assets held in Trust, such as filing an income tax return or renewing a lease on a rent-controlled apartment.

For some people, a Revocable Trust is a very appropriate estate planning vehicle. However, they are sometimes overused and are not for everybody. If you have questions regarding whether a Revocable Trust is an appropriate estate planning tool for you, discuss it with your attorney or contact me today.