When you start asking around for estate planning advice, you will probably find the first thing many non-experts say about it is that you need to get a revocable living trust. They are extremely popular instruments and articles abound on the Internet extolling their virtues. They are so popular that a common belief is that everyone should get one.
That noted, they do have drawbacks and these drawbacks might make some people decide to go another route. Contrary to popular belief, revocable living trusts do not offer tax protection. Different trust and estate planning tools can be used to reduce tax liability. Another drawback, is that revocable living trust give take assets out of probate, and sometimes you lose valuable benefits found in probate. For example, in Maryland, creditos can only come after assets in the estate for six months after death, versus the usual three year period. Placing assets in revocable trusts take them out of probate and give them longer exposure to unwarranted creditor claims.
Specifically, the Motley Fool looked at the benefits and drawbacks of revocable living trusts in "Is a Revocable Living Trust Right for You?"
The biggest benefit of a revocable living trust is that your primary assets, as long as they are transferred into the trust, do not have to go through probate when you pass away. As probate can be an expensive and time-consuming experience, this can make handling your estate much easier for your heirs. In Maryland, probate is relatively inexpensive and less lenghty, so some people may find it to their benefit to be in probate. Probate is also normally a public process, but if you have a trust you can keep your estate details private. Probate is public in Maryland and DC. Finally, should you become incapacitated a successor trustee can take over your finances instead of having to go through court to get a guardian.
On the other hand, trusts can be more expensive to set up than other estate planning instruments, but they might save your estate money in the long run depending on probate costs. Transferring assets into your trust can also be very time-consuming depending on what you own. Having a revocable living trust also does not mean you do not need a will. You will still need a simple will to deal with anything left out of the trust. If you want a consultation on whether revocable living trust is right for you, contact the Profit Law Firm.
Reference: Motley Fool (Sept. 10, 2016) "Is a Revocable Living Trust Right for You?"