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What Is a Revocable Trust?
In its most basic form, a revocable trust is nothing but a container or box with an open top. This means once a trust is created by our law firm, you and your family then go through your lives placing your assets or things you own into that trust.
For example, once a trust is created, you can move your home into that trust by way of recording a new deed filed at your county recorder’s office. You place your checking and savings accounts by having your bank retitle your account to the name of the trust. Finally, you can place motor vehicles into your trust by re-titling the vehicles to the name of the trust. These acts move your assets into the trust. Once assets are placed into the trust, they are distributed upon you (or you and your spouse’s passing), exactly how you decide they are to be distributed.
Is there an actual container or box being created? No, the revocable trust is created by way of legal fiction, so nothing tangibly actually exits, just paper documents filed by our Phoenix attorneys.
What Are the Differences Between Wills and Trusts?
Wills and trusts serve similar but distinct legal purposes in Arizona. Both communicate what the person making the legal instrument—known as the principal—wants to be done with their property, finances, and personal obligations after they pass away.
Wills
Through a will, a principal can leave instructions for how their tax and debt obligations should be resolved, who should receive guardianship of their children, what should be done with business and personal assets, and who should inherit certain property and assets. Wills are public documents managed by the court system, meaning that a probate court will still be involved in the execution of a will however now with a Will the Court has a roadmap or a set of instructions on where that person wanted everything to go. This can streamline the Probate Process and add a piece of mind.
Trusts
To get around this, a person in Chandler can create a Revocable Trust and once established, can place some or all of their assets into that private Trust. Revocable trusts can be modified or terminated at any time by the principal prior to their death, while irrevocable trusts offer greater protection from tax liability but cannot be changed at all once they are put in place.
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Benefits and Drawbacks to Revocable Trusts in Chandler, AZ
The primary benefit of putting assets into a trust is avoiding any of those assets being distributed through the probate process rather than in accordance with their owner’s wishes following their death. Wills can specify exactly who should get certain assets, but trusts allow for greater control over those assets by both the principal and any trustee they designate to manage them.
In addition, trusts can include terms that address what should be done if the principal becomes incapacitated and unable to make decisions on their own prior to their death. By allowing trustees to make these decisions on the principal’s behalf, revocable trusts can often greatly simplify the asset distribution process during complex and emotional times.
That being said, revocable trusts are not without their downsides. While principles of revocable trusts in Chandler can adjust the terms, trustees, and beneficiaries of their trust whenever they want while they are alive, In some cases a person’s creditors can still liquidate assets within revocable trusts to pay for debts a principal has in life.
Talk to a Chandler Attorney About Setting Up a Revocable Trust
In many situations, it is beneficial for people in Arizona to establish both wills and trusts as part of their estate planning process. Both documents combined can ensure your assets go where you want them to after your death and minimize the risk of probate regulations and unforeseen circumstances interfering with your wishes.
A knowledgeable revocable trust attorney can offer further guidance about establishing a revocable trust in Chandler. To start exploring your legal options and the peace of mind that comes with having a complete estate plan in place, call to set up a consultation with one of our estate planning attorneys today.
