Why Choose a Revocable Living Trust Over a Will as a Main Estate Planning Document?


Richard Morgan, Morgan and Disalvo.

This video newsletter is on a very important topic. Why would you choose a revocable living trust rather than a will as your main state planning document? The document says where my stuff goes when I die. There’s a series of reasons you may want to use a revocable living trust over a will. It should not be same for everybody.

The benefits are number one, you live in a bad probate state like the state of Florida. We live in the state of Georgia and in Georgia probate is quite simple. I refer to Georgia simple probate state. We don’t really care about probate unless you’re special circumstances. In most cases, probate in Georgia just is not a big deal and no need to worry about avoiding it.

Number two, avoiding post-death disputes. If you have a situation, we have a troubled beneficiary, we’re treating people differently than they would expect, someone’s going to get upset about your plan. You have a blended family situation, kids of a prior marriages, someone may not be happy with what’s going on. Various different reasons. You think there may be a fight, potential dispute, when someone passes away. The best way to avoid that fight is that we fully funded, put all your assets into a revocable living trust based plan.

Also, if you have a spouse, maybe second spouse and there’s under some states loss something called a four share, out of Georgia law it’s called a year support. It’s where the spouse can’t force a share out of the estate. If you want to avoid that, especially in Georgia, you can avoid a year support claim by having the assets not past your probate. If you pass them through your revocable trust, you can avoid a year support claim. Basically, someone trying to mess with your plan.

Next one, longterm incapacity. This one applies to pretty much everybody. A financial power of attorney is a pretty good document but it is an agency agreement so that your agent, the one helping you, is go into a third part like a bank or financial institution and they are saying, please let me help this person with this document. You’re asking, you’re saying please. In contrast to that with revocable living trust, if the assets are in the trust, that same type agent is now the trustee of the trust and the trustee is the literal owner of the asset under the trust agreement, which means you go from a power of attorney agent saying please to the third party, the bank, financial institution, insurance company. With the trust, the only reason they say please cause they’re Southern, they’re being nice. They say you shall. It’s a different level of power.

The revocable living trust also, if your mental capacity has been lowered, dementia, things like that, it’s also a better way to protect you from yourself. Aging cannot actually stop you from doing any acts. They can’t take away your checkbook. They can’t do things like that, but a trustee, if a doctor says, we have it in the documents that says you are incapacitated, your doctor signs off, your healthcare agent signs off, you incapable of handling your financial affairs, then the trust becomes irrevocable. You’re removed as the trustee. Your backup trustee comes in and then uses your assets for your benefit. It’s a way to protect you from outsiders and yourself and to help take care of you if you start getting diminished mental capacity.

If you have privacy concerns, if you have a family situation, your plan is not what you would call normal and you don’t want anyone to know what’s going on, then you may consider privacy. A will needs to be filed at the probate court, so it becomes a public document after you pass away. A revocable trust does not become a public document unless it’s in the middle of litigation matter, then you may have to file it.

If you own or you plan to purchase real property, a house, a condo, real estate in another state outside your home state, you’re required to probate that will in every state which you own land, real property. If you own that property in the revocable trust rather than your own name, then when you die, there’s no probate in the other state because the owner didn’t die because you didn’t own it, the trust owns it, trust it and die, therefore no probate. It’s a way to avoid administrative costs and hassles after you pass away if you own real property outside of the state of Georgia.

Next one, specific request. If you’re the kind of person that would like to make gifts off the top. Let’s say the master plan is take care of my spouse and down to the kids or down to the kids or something like that. If you want to give some assets right off the top, I want to give 10,000 to charity. I want to give this item to this person outside the master plan, you can actually put that on a schedule with a revocable trust. That schedule can be created and torn up and redone without a lawyer ever being involved.

With the will, you can do the same one kind of. It’s not legally enforceable. What we’ve worked out a way you can do it with sentimental, not worth a lot of money, tangible personal property items. Something that no one’s going to fight about. It’s sentimental. You can do it with a will, but if anyone complains it’s not legally enforceable. Anything other than that, you got to put it in the will. If you change your mind, then you have to change the will legal fees. If you have a desire to give away specific requests of any significance, you can avoid it later attorney’s fees by having your revocable living trust.

Another situation, you do not have enough people, individuals who can assist you as your agent on your financial power of attorney. You might need a professional. Professional trust companies are happy to be your executor. They’re happy to be your trustee. They in general do not want to serve as your agent under your power of attorney. We have come up with an agreement with a few trust companies and they will agree to serve as your agent and a financial power of attorney, but only if you use a revocable living trust based plan.

The way the theory works is upon your incapacity served up by a doctor or whatever the process is, the trust company kicks in if there’s no one above them in the list. They will use the power of attorney, take all your assets and move them into your revocable trust, but they can’t move all your assets. You cannot move IRAs qualified plans because that’s an income taxable event. They’ll still use the power of attorney to manage your IRAs and qualified plans. If you need a trust company to serve as an agent or power of attorney, you have no choice but to use your revocable living trust based plan.

The last one, and if you read on the internet, you’ll see a lot of people will say, everyone needs a revocable living trust and you need to put all your assets in that trust while you’re alive. I do not have that belief. What I have learned from those that believe in it, that I highly respect, their position is, I’ll just call it taking one for the team. Think about this. When someone gets incapacitated or deceased in your family, some people will get very uptight, they get very nervous, they get very uptight, they’re kind of freaking out a little bit. If you instead, while you’re alive and you have capacity, you create a revocable living trust-based plan, you put all your assets in that trust. If you become incapacitated or deceased later, your family members may be a little bit less stressed out, have less things to do. And so, the theory is that you’re willing to do whatever it takes to make your family’s life a little bit less stressful and basically take one for the team.

Those are the reasons why the benefits you would get from using a revocable living trust-based plan instead of a will as your main document, and then you for yourself have to decide which do I like better, less money and more simplicity, or I’ll go a little bit more complicated, a little bit more expensive, but I get these other benefits.

Richard Morgan, Morgan and Disalvo.

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