Our previous post shared insights into probate, which is the process by which a person’s assets change hands at their death, as well as into various ways that probate might be avoided.
One method of avoiding probate is a revocable trust. The advantage of a revocable trust for probate avoidance is that, when it is established and properly funded, it ensures a consistent estate plan.
Too often, when people rely on designated beneficiaries and joint ownership, the result is a plan that is skewed unintentionally toward one or another beneficiary. The reason for this is that if you have multiple beneficiary designations, and you change one but forgot to change the others, you may create a different distribution than the one you had in mind. By contrast, with a revocable trust, the change can be made once (by means of an amendment to the trust) and this will affect all assets.
Other reasons for creating a revocable trust include:
- Minimizing estate taxes
- Keeping assets available for children until they reach adulthood