Revocable Living Trust
A Revocable Living Trust (RLT) is an effective tool for preserving privacy, eliminating the need for probate and preparing your estate for ease of transition upon your death. The RLT is established by written agreement and records the arrangement wherein you transfer ownership of your property into the Trust during your lifetime.
There are 4 main components to a Trust:
- Trustor: The creator of the Trust;
- Trustee: The person/entity who accepts the property into the Trust, and who manages and distributes the property in accordance with the Trustor’s directions;
- Trust Assets: The property transferred into the Trust by the Trustor;
- Beneficiary: Those who receive the Trust assets.
Creating your Revocable Living Trust
The Revocable Living Trust is created by the Trustor (you), who generally also serves as Trustee, and retains ownership and complete control of all assets transferred. The RLT offers flexibility for you to manage your estate, is revocable and may be amended by you during your lifetime.
As Trustor, you are able to transfer the property into the Trust (with certain exceptions), and direct what happens to those assets in the event of your incapacity and/or death. In the event you become incapacitated, your nominated Successor Trustee can manage your assets in accordance with your stated desires.
Nominating a Successor Trustee essentially eliminates the need for guardianship, and can manage and distribute your estate upon your death, avoiding the (oftentimes) complex and expensive Nevada probate process.
Related Articles: Avoiding Probate and Inheritance Tax; Probate 101: What is Probate
We tailor each RLT to suit the individual’s particular needs.
Funding your Revocable Living Trust
Funding your RLT is extremely important, and relatively simple to accomplish. You can transfer out-of-state real property into your Trust to avoid the need for a probate proceeding in the state the real property is located. The RLT can be the beneficiary of certain Life Insurance policies and other accounts, which could eliminate the need for a guardian being appointed for minor heirs, and to avoid certain beneficiaries being disqualified from receiving government assistance.
Further, you can stipulate how and when beneficiaries receive their inheritance, [i.e., graduating from college, or attaining a certain age], all the while providing for their health, education, maintenance and support until such time as they reach that milestone. You can also give your Successor Trustee the discretion to withhold certain distributions, based upon a beneficiary’s personal situation (i.e., divorce, bankruptcy, drug dependency etc.).
In community property states, such as Nevada, married couples and registered domestic partners can create joint RLT’s. Typically, these Trusts provide for transfer of ownership of all assets to the survivor upon the first death (the assets remain in the Trust), however the Trustors can address issues such as providing for children from prior marriages, and/or concerns regarding estate taxes for estates that exceed the estate and gift tax exemption.
Nevada Statutes also permit a pet owner to set up a Trust to benefit pet(s) following the pet owner’s incapacity and/or death, wherein you set forth your desires regarding your pet’s caregiver, comfort, food, schedule, veterinarian, and the like. The Trust will also name a contingent beneficiary to inherit the balance of your Trust assets upon the death of your last surviving pet. We can assist you in documenting your desires for your beloved pet(s).
The main disadvantage of the RLT is that drafting and funding it is more expensive than executing a simple Will; however, avoiding probate and the potential estate tax savings make the RLT the better investment.