Revocable Trust Overview

By Kevin Taylor

Today’s email is the second in our series of general estate planning tools and techniques.

Revocable Trust (Living Trust)

One of the first questions we usually hear when starting the estate planning process is “what is, and do I need, a Revocable trust?” A Revocable trust is a common estate planning instrument, which when properly executed and funded, will permit an individual’s assets to pass at their death without the involvement of the Court process, known as “Probate”. Probate is the legal process that empowers an individual or institution to transfer assets in a decedent’s individual name, unlike assets held in joint tenancy or which have a beneficiary designation, which pass directly upon an individual’s death. By executing a Living Trust Agreement and transferring all assets into the name of the trust, an individual can directly empower the Trustee or a Successor Trustee under the trust to transfer assets held by the trust at death. Since the Living Trust Agreement itself designates and empowers the Trustee or Successor Trustee, the need to have a Court designate an Executor or Personal Representative for transferring assets of a decedent is avoided, and with it, all other legal formalities of the Probate process.

A Living Trust Agreement can be, but is not always, designed to save Federal and State Estate Taxes. Living Trusts are therefore appropriate for individuals with all different sizes of estates, not just for those wherein estate tax may be applicable. From an income tax perspective, during the life of the creator of the Living Trust, all income earned by the trust assets is included on the creator’s personal income tax return. As such, no separate tax identification number need be obtained for such trusts during this time.

Living Trusts are a very common and useful estate planning instrument for a variety of reasons. Some of the more prominent reasons for executing a Living Trust Agreement include:

Confidentiality. Unlike the Probate process, which requires a decedent’s Last Will and an Inventory of a Decedent’s Assets be made public record at the local courthouse, the provisions of Living Trust Agreements and the assets transferred under such instruments are kept confidential.
Avoidance of Probate. Assets held by a Living Trust Agreement may pass without the legal expense and involvement of the Probate process. As such, assets may pass more quickly to intended heirs, and thereby save significant administrative expense.
Disability Planning. By the naming of successor trustees, Living Trusts enable an individual to establish a clear succession for management of their assets and financial affairs in the event of their incapacity.
Flexibility. Since the execution formalities of Living Trust Agreements are less restrictive than Last Wills, Living Trusts can be amended or modified more easily.

When properly drafted and tailored to an individual’s particular needs, Living Trusts are a valuable estate planning instrument. As with any estate planning instrument, legal assistance should be sought to determine whether a Living Trust is appropriate for you.

Kevin Taylor is a financial advisor located at Vaughn Wealth 1127 Edgewater Drive, Orlando, FL 32804. He offers securities and advisory services as a Registered Representative and Investment Adviser Representative of Commonwealth Financial Network ^® , Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 407-872-3888 or at Kevin@vaughnwealth.com.

Kyle Taylor is a financial advisor located at Vaughn Wealth 1127 Edgewater Drive, Orlando, FL 32804. He offers securities and advisory services as a Registered Representative and Investment Adviser Representative of Commonwealth Financial Network ^® , Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 407-872-3888 or at Kyle@vaughnwealth.com.

This communication strictly intended for individuals residing in the states of : AL,CA,CO,FL,GA,HI,KS,MO,NC,NY,OH,OR,SC,VA. No offers may be made or accepted from any resident outside these states due to various state regulations and registration requirements regarding investment products and services. Investments are not FDIC- or NCUA-insured, are not guaranteed by a bank/financial institution, and are subject to risks, including possible loss of the principal invested. Securities and advisory services offered through Commonwealth Financial Network, ®Member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services offered through CES Insurance Agency or Vaughn Wealth.