The Revocable Living Trust – The Better Alternative to a Will
Most Americans have been led to believe that a Will is the way to handle their final affairs. That is because most lawyers profit from their clients having one. How can that be, because wills are typically not very expensive?
Here is the dirty little secret that most lawyers don’t want you to know: they stand to make tons of money after you pass away when your will has to go through probate. During the probate process, the lawyer will bill your estate by the hour. On average, probate costs in Minnesota range from 3% – 5% of the total estate value. For example, if your estate is worth $500,000, roughly $15,000 – $25,000 will go to probate costs. And not to your family or favorite charities. Now you know why your will so was inexpensive!
To add insult to injury, the longer the probate takes, the more the lawyer will make. So if your will is poorly drafted, the probate will take longer and the attorney will be able to charge more! This is a conflict of interest. It’s like taking your dog to a veterinarian who also runs a taxidermy operation right next door. Either way, you’ll get your dog back, but you may not like what he looks like. And your family certainly won’t like having to pay two separate bills.
So how can you avoid the probate process? By not owning any assets in your own name when you pass away. But this doesn’t mean giving all your assets away now. Rather, you can set up a Trust to own your assets. While the Trust owns your assets, you remain in control because you can name yourself (and your spouse, if you are married) as Trustee of your Trust. Your Trust agreement will specify a Successor Trustee to take over after you pass away. Your Successor Trustee will then divide up and distribute your assets as you have specified in the Trust Agreement. Privately. Without court involvement. And without a trial lawyer making money off your family after you are gone.
The type of trust many people use is called a Revocable Living Trust. Because it’s revocable, you can get the assets back at any time while you are alive. And because it’s revocable, you can also amend your Trust at any time as well. It’s actually easier to amend a trust than it is to implement a codicil to a will. Once you pass away, however, your trust becomes irrevocable and cannot be changed. A properly drafted trust cannot be contested like a will can. And unlike a will, a trust is private because there is no need to file it with the court.
A Revocable Living Trust has many other important benefits as well. It can protect your assets after you pass away. Under a trust, you can spread distributions to your heirs over time. And a trust may be able to help you minimize state and federal estate taxes.
How can I decide if a Revocable Living Trust is right for me?
Call today to schedule your complimentary estate planning consultation with Ed Matthews.
Ed Matthews is one of only a few attorneys in the state of Minnesota who is also a currently licensed Certified Public Accountant (CPA). Ed graduated summa cum laude from William Mitchell College of Law in 2003, where he served as Executive Editor of the Law Review. He is a former Minnesota Supreme Court law clerk. Perhaps, most importantly, he does not practice probate! Instead, he has dedicated his life to helping Minnesota families avoid probate and protect their hard-earned assets.
To schedule a complimentary consultation with Ed Matthews, call (651) 501-5608.
Leave a Comment