When it comes to managing your estate after you pass away, you have a general plan in place. If you were to pass away, though, these plans may be invalidated and tabled for later discussion. It’s essential to have a comprehensive estate plan in place to ensure continuity and support for your family members. Planning for your end may sound morbid, yet doing so will help get matters in order for your family when you die. One way to ensure that you are receiving the best possible service is to hire our team of estate lawyers in Bethesda. JDKatz is proud to serve as your go-to source for estate law, delivering comprehensive support through every stage of this complex process. Since 2000, our firm has specialized in estate and tax law measures to optimize the outcome for our clients no matter the case.
An ounce of prevention is worth a pound of cure, and our estate planning services strive to save you from a variety of problems. Today, we’ll continue to discuss what a revocable living trust (RLT) is by highlighting a few important tidbits and possible drawbacks to deliver a full picture of smart estate planning. When done, be sure to contact us with any questions you have.
Important Facts to Remember
- A will is still required. Even when all of your assets are in order, a document is required to help deliver directions and cover any property that was not addressed in the RLT. A pour-over will, for example, is utilized to help direct the transfer of your more intangible assets upon death. If you have minor children in need of guardianship, it’s important to remember that living revocable trusts cannot cover guardianship.
- Tax obligations do not change. Your tangible property will be taxed in the state where it is located. Intangible assets are also taxed, but they are done so according to where the decedent resided until their death.
- Costs will occur up-front. While estate planning is a smart way to preserve your assets and ensure continuity within the family with beneficiary benefits, it’s important to know that funding will be needed for an initial setup. Your trust-centered estate plan will involve numerous factors that all need to work together harmoniously to create a plan that is both accurate and reliable. The more complex your estate is, the more costly it will be to develop an RLT. Remember, though, that this cost should easily be made up for when avoiding the probate process!
Disadvantages of Revocable Living Trusts
While living trusts are handy tools for building your estate plan, they are not a one-size-fits-all solution. Different
- Proactive bookkeeping required. RLTs require extensive records in order to remain clear, concise, and legally binding. Part of running this plan revolves around continually registering new assets to designate them as property of the trust. It’s important to designate what assets are owned by the trust, and keeping this section up-to-date can involve arduous bookkeeping.
- Limited asset protection. While placing your money in a living trust may make it more difficult for creditors to access your funds, it is important to remember that RLTs provide relatively little asset protection. Since this trust is revocable, it is by no means permanent. You still own your property and can do what you wish with it. The obvious tradeoff here is that creditors can come after property you own.
- No benefits for taxation. Generally, living trusts provide no tax benefits for your estate. Since RLTs can be changed and modified by the Grantor, all of the assets placed therein can be taxed. Any income here will need to reported on the taxes of the person who made the RLT, with that wealth being categorized as individual income tax. You will have a living trust, yet your social security number will be attached to it for income reasons.
- Titling consistency. Keeping everything organized and titled will be a big part of running and developing your estate plan. One aspect of this trust involves proper titles, with all aspects of the trust needing to be titled to the Settlor or Grantor. From checks to deposits to property, everything must be listed under a proper title for ensured continuity. If you are managing an estate for a loved one, the full title of their estate will need to be on checks, properties, and more.
- Unexpected road bumps. Numerous hazards exist that can effectively derail your estate plans. Whether you are dealing with issues with your title insurance or you are facing a major life change, things happen that may disrupt even the most airtight continuity plans. Failing to take care of any minor disruptions now can also snowball into bigger challenges down the road, requiring more work to overcome. In any case, it pays to reach out to a team of professional estate planning attorneys for assistance.
Professional Help for Your Unique Goals
The JDKatz team is here to offer comprehensive support for your estate law needs. We specialize in estate and tax law, relying on decades of experience to help deliver the best possible services for your unique situation. Proper estate planning can provide numerous benefits for you and your loved ones, yet vigilance and constant upkeep are required for the best results. Our Bethesda estate planning attorneys can help you to choose and develop the perfect trust for your unique needs and goals.
If you are looking for help from professional estate lawyers in Maryland, we can help! JDKatz is proud to provide outstanding advice and guidance to help optimize the results for your estate. Contact us today to learn more or to see what our trust and estate experts can do for you.