Revocable Living Trusts

Revocable living trusts are trusts that are created in a written agreement during the lifetime of an individual and are used primarily for estate planning purposes. There are three parties to a revocable living trust, namely: (1) the settlor (the person creating the trust); (2) the trustee(s) (the business manager); and (3) the beneficiaries for whose benefit the trust is created. The settlor can enjoy the benefit of the income from the trust while he or she is alive and can provide for the distribution of trusts assets upon death to beneficiaries that are identified in the revocable trust agreement. The trust is funded by assets transferred to it that are titled in the name of the trustee(s). A revocable living trust can be terminated by the settlor at any time before the settlor dies.

Seminars are held periodically to discuss revocable living trusts and these trusts are otherwise advertised and marketed extensively in this country. Many people decide to have a revocable living trust in order to avoid probate. There are, however, some advantages to the probate process in Maryland, including a six month limitation period after the death of the decedent for creditors to file claims. The use of a revocable living trust could extend the period during which creditors may make claims against the property of the decedent held by the trust. Another concern raised is the cost of probate; however, in Maryland, the cost of probate may be less than the cost of setting up a revocable living trust. Also, family members of the decedent may have suspicions and fears arising from the handling of the affairs of the decedent by a family member who is a trustee under a revocable living trust. These concerns may be alleviated more easily by the judicial oversight provided by the probate process. On the other hand, probate is a public process and the papers filed during the administration of an estate will disclose a great deal about the assets and income of a decedent. Also, distribution of the assets of an estate may be delayed longer than the distribution of assets to the beneficiaries from a revocable living trust.

The pros and cons of having a revocable living trust are best discussed with an attorney. If you would like to discuss a revocable living trust or other matters pertaining to estate planning, call my office for a consultation.