The Pros and Cons of Revocable Living Trusts

The Pros and Cons of Revocable Living Trusts

Are you considering setting up a revocable living trust as part of your estate plan? It's important to weigh the pros and cons before making this decision. Let's take a closer look at some of the advantages and disadvantages of using a revocable living trust:

Pros:

1. Probate Avoidance: Assets held in a revocable living trust do not go through probate, which can save time and money for your heirs.
2. Privacy: Unlike a will, a trust is not a public document, so your financial affairs can remain private.
3. Incapacity Planning: A revocable living trust allows you to appoint a trustee to manage your assets if you become incapacitated.
4. Flexibility: Since the trust is revocable, you can make changes to it whenever you like, giving you more control over your assets.
5. Asset Protection: A trust can protect your assets from creditors and lawsuits, preserving your wealth for your beneficiaries.

Cons:

• Cost: Setting up a revocable living trust can be more expensive than creating a will, due to legal fees and ongoing maintenance costs.
• Lack of Tax Benefits: Unlike an irrevocable trust, a revocable living trust does not offer tax advantages, such as estate tax savings.
• No Medicaid Planning: Assets in a revocable living trust are still considered part of your estate for Medicaid eligibility purposes.
• Complexity: Managing a trust requires ongoing paperwork and record-keeping, which can be cumbersome and time-consuming.
• Limited Creditor Protection: While a trust can offer some level of asset protection, it may not shield your assets completely from creditors.

Before deciding whether a revocable living trust is right for you, it's essential to consult with a qualified estate planning attorney to discuss your specific needs and goals. While a trust can offer many benefits, it's essential to understand the potential drawbacks as well. By weighing the pros and cons, you can make an informed decision that best suits your individual circumstances.