Revocable trusts are an estate planning tool that lets the person who creates the trust maintain control over their assets during their lifetime. Revocable trusts are a popular estate planning tool, but several myths surround their use and their benefits.
Myth 1: Revocable trusts avoid all taxes.
While revocable trusts offer many benefits, avoiding taxes is not one of them. Assets held in one of these trusts are still considered part of your estate for tax purposes. For this reason, you should engage in proper tax planning while setting up a trust.
Myth 2: Revocable trusts are only for the wealthy.
Many believe that revocable trusts are only necessary for those with significant wealth. However, revocable trusts can benefit individuals with modest estates by simplifying the transfer of assets, avoiding probate, and providing clarity in case of incapacity.
Myth 3: Setting up a revocable trust is complicated.
Although creating a revocable trust can be more complex and costly than drafting a simple will, it is not cost-prohibitive. The initial effort and expense can be outweighed by the savings in probate costs and the ease of asset management and distribution.
Myth 4: You cannot change a revocable trust.
The term “revocable” means that you can alter the trust, amend it, or even revoke it entirely while you are alive. This flexibility allows you to adjust your estate plan as your circumstances and wishes change.
Are you interested in setting up a revocable trust? Contact our office today!