Revocable Living Trusts in Fairfax
Revocable living trusts in Fairfax are trusts written and created during a settlor’s lifetime. These documents can provide a streamlined mechanism for managing the settlor’s assets during and after life and avoiding probate. They can typically be revoked, amended, or modified at any time when the settlor is alive and maintains the requisite capacity. When the settlor dies or becomes incapacitated, the document becomes irrevocable. These documents are tax neutral and do not on their face save the settlor any income or estate taxes.
If you need legal advice about revocable living trusts, reach out to a skilled trusts and estates lawyer. An attorney could help you create a plan catered to your specific financial situation. Call today to schedule a consultation and get started planning your estate.
Benefits of a Revocable Living Trust
The primary benefit of a revocable living trust is to avoid probate. That is accomplished by having the person’s assets such as bank accounts, retirement accounts, houses, and real estate put into the name of the trust. At the person’s death, none of those assets have to go through probate in order to be distributed; they would just be handled pursuant to the terms of the revocable living trust.
A secondary benefit would be to keep assets private. The people who are already named trustees and the people who are benefitting from the trust would be kept private, whereas when a person dies, the will is typically filed and becomes public information.
Disadvantages of Revocable Trusts
One disadvantage of a revocable trust is the fact that the trust has to file its own income tax return, and this happens after a person dies. While the person is living, the income that is received from the trust gets filed under the living person’s social security number. At the person’s death, every year that the trust is in existence, the trust must file its own income tax returns which carries expenses and fees. There are also costs associated with administering a trust, especially if the trustee is a professional agency like a trustee company.
The grantor – also known as the settlor – of a revocable living trust has the right to revoke or amend the trust at any time. They have the right to name the trustees and beneficiaries and how the income and principle are distributed to the beneficiaries of the trust. They are also able to determine at what time distribution will occur.
Common provisions in a revocable living trust include who the named trustees are and who the named successor trustees are. Trusts include provisions how beneficiaries are to receive funds from the trust, at what time, in what proportions, and if those people are no longer living, who is to receive the funds in their place.
Other examples of provisions would be how the taxes are going to be handled. In some cases, these trusts also have provisions about any property that is not being distributed pursuant to the terms of the trust. This sometimes includes tangible personal property, such as a person’s personal effects which could be described and distributed in a different way.
One common misunderstanding is that trusts can be a way to avoid taxes. Trusts have to pay income taxes and file tax returns, but when a person is living, the income that is received gets filed under that living person’s social security number. At best, the taxes have to be filed separately under a different tax ID that the trust then receives after the person’s death.
Another common misunderstanding is that trusts are a way to avoid creditors. In some cases, this is possible, but it is not a good way to avoid creditors.
Reach out to a Fairfax Trusts Attorney for Assistance
If you need advice or assistance with your estate planning process, reach out to an experienced trusts lawyer today. A lawyer could look at your situation to help you decide if revocable living trusts in Fairfax are a good fit for your estate plan. If so, they could guide you through the process of creating and administering the trusts so that your end-of-life wishes are followed. Reach out to a dedicated trusts and estates lawyer today.