Cookie-cutter estate plans often are not as effective as personalized estate plans. This is because they cannot possibly address every person’s unique situation and estate planning goals.
Although it is important to create a customized estate plan, some estate planning documents are popular because of their versatility. Among all estate planning tools, the revocable living trust may be one of the most flexible.
A revocable living trust can serve many purposes
A living trust is a type of trust that you create during your lifetime. When a living trust is revocable, you can modify or revoke it while you are still alive.
Like a will, a revocable living trust can be used to detail how you want your property distributed after your death. However, it works differently than a will does. If you have a revocable trust, you can transfer ownership of your property to the trust. Once owned by the trust, the trustee will manage that property on behalf of your beneficiaries and eventually distribute that property to your beneficiaries according to the terms of the trust.
Some of the other goals that a revocable living trust can accomplish, include:
- Avoiding probate
- Keeping assets and beneficiaries private
- Continuing to manage property yourself as the trustee
- Designating someone to manage your property when you cannot do so yourself
- Preventing the need for adult guardianship
A revocable living trust cannot do everything
Although a revocable living trust can accomplish many estate planning goals, there are some goals it cannot meet. If you want to name a guardian for your minor children, you can only do so with a will. Revocable living trusts also cannot replace medical directives.
For many people, a revocable living trust can be a beneficial component of an estate plan because it can serve many purposes. However, a thorough estate plan may still include several other documents as well. The best combination of estate planning documents will always depend on your personal situation.