4. Revocable Trusts

Revocable Trusts are one of the most widely used estate planning tools, but are often misunderstood. For individuals and families with significant assets, establishing a trust can be a necessary and highly advisable step. Yet, creating the trust is only part of the process. It must also be funded to be effective.

Before diving deeper into revocable trusts, it is worthwhile to revisit the foundation of your estate plan: the will. For more detail on why every adult benefits from having a valid will, see our previous blog post, Who Needs a Will? Spoiler Alert: Everyone.

Types of Trusts

There are many kinds of trusts, each serving a different purpose:

• Revocable Living Trust – Flexible, allows you to add or remove assets during your lifetime.

• Testamentary Trust – Created upon death through a will, often for minor children.

• Special Needs Trust – Provides support for disabled individuals without jeopardizing benefits.

• Totten Trust – A payable-on-death account set up at a financial institution.

• Qualified Personal Residence Trust (QPRT) – Protects and shelters the value of your home from taxes.

• Irrevocable Living Trust – Permanent, often used for tax planning, business transfers, or charitable giving.

• Medicaid Asset Protection Trust – Helps protect assets while qualifying for Medicaid.

• Spendthrift Trust – Limits a beneficiary’s access to protect assets from misuse.

• Charitable Remainder Trust – Provides income to the grantor, with the remainder going to charity.

• Minor’s Trust – Protects and manages assets until a child reaches adulthood.

This is not an exhaustive list, but it shows how trusts can be tailored to meet any individuals needs.

Who Might Need a Trust?

Trusts can be especially valuable for:

• Families with complex or multi-state assets

• Blended families needing clarity on inheritance

• High-net-worth individuals

• Those concerned about incapacity

• Individuals wishing to avoid guardianship or probate

• Those who value privacy in estate matters

• Families with minor children or dependents with special needs

  
  

While not all assets should be placed in a trust—for example, retirement accounts—trusts are a powerful option for many estate plans.

What Is a Revocable Trust?

Also known as a living trust or inter-vivos trust, a revocable trust allows you to transfer ownership of assets into the trust while maintaining control during your lifetime. You can amend or revoke it at any time. Upon your death, the trust becomes irrevocable, and a successor trustee distributes assets to beneficiaries.

Benefits of a Revocable Trust

Some of the primary benefits include:

• Asset management if you become incapacitated

• Probate avoidance for a quicker, more private transfer of assets

• Flexibility to amend the trust as needed

• Control over how assets are distributed to minors or dependents

• Ease of administration without court involvement

• Uninterrupted investment management after incapacity or death

Placing real estate in a revocable trust can also cover immediate expenses after death, simplify the selling process, and allow you to leave special instructions about your home.

Drawbacks of a Revocable Trust

Revocable trusts do have limitations. They require time and effort to establish, generally do not provide tax advantages, and offer no creditor protection during your lifetime. Additionally, assets must be retitled in the trust’s name, and the plan must be monitored regularly.

Final Thoughts

Whether a revocable trust is right for you depends on your unique circumstances. While a will may be sufficient for simple estates, a revocable trust offers significant advantages in flexibility, privacy, and probate avoidance. For those investing in a comprehensive estate plan, it is often the place to start.

Be sure to tune into the Bar Essentials podcast episode, where I will take a deeper dive into Revocable Trusts—exploring how they work, who might benefit from them most, and why important steps such as retitling your home into the trust are critical to making sure your plan truly achieves its purpose.