A revocable living trust is a trust that you set up while you are still living and to which you immediately transfer ownership of assets that you plan to pass on to your heirs. You continue to control your assets within the trust and can revoke it or change it at any time.
The chief advantage of living trusts, advise experts, is that after your death the ownership of the trust passes directly to the beneficiaries; it does not have to go through probate. Experts caution, however, that living trusts are not appropriate for everyone. Many states have simplified probate, so a living trust may not save money or time.
Living trusts can range from the simple to the complex. Be wary of the "one-size-fits-all" trusts marketed over the phone, by mail, at the door, or through seminars. Even though you can create your own trust using a self-help book or software, experts recommend that you use an attorney. In order to achieve the outcome you desire and to protect yourself and your beneficiaries adequately through the trust, there are some complexities and issues that a qualified attorney can best help you work through.
A living trust can also provide a way to handle your affairs if you become incapacitated. In this case, your co-trustee or successor trustee can take over management of the trust. Even if you have a living trust, legal experts point out that you still need a will to take care of assets that aren't in the trust.
The popularity of living trusts has given rise to living trust scams and schemes. Here are some tips to help you avoid them:
Consult a qualified professional before buying a "one-size-fits-all" or "cookie-cutter" living trust "kit".
Get your questions answered to your satisfaction. If you feel pressured, consider choosing another advisor who is more willing to work with you.
Compare prices for preparing a trust to make sure the price is fair.
Be wary if a trust salesperson quotes specific results or cost savings.
Meet with the lawyer personally.
These are two very specialized fields and it is unusual to find someone that has the depth of expertise you need in both.