A Revocable Trust, commonly known as a Family or Living Trust, is different from a Will in that it saves an estate from probate and provides a greater degree of privacy.
Many people ask, “Why should I bother creating a Trust?” It is a common misconception that only wealthy individuals should create a trust to protect their assets and estate. However, a Trust is actually beneficial for a multitude of reasons.
An Arizona Family Trust or Living Trust creates a binding legal contract that serves to specify and manage the distribution of the Trust’s assets. A Trust can assist in the following:
- Take advantage of tax benefits
- Avoid probate
- Preserve your privacy
- Manage financial dealings
Much like financial planning, preparing a Living Trust allows you to make plans for your estate after your death. A Family Trust is established during our lifetime and is usually revocable, allowing you to make changes. Additionally, if a situation arises due to changes in your financial circumstances, you have the ability to reclaim property that was transferred into the trust.
A Revocable Trust dictates how you want your property to be handled while you are alive and distributed upon your death. If an individual dies without a Trust, there could be a probate to determine the distribution of the estate, which can be a costly and lengthy process. The probate process serves to validate the Last Will and Testament, if one exists. However, the probate process opens the estate to the public as well as allows public viewing of the estate’s distribution, which is why both a Will and a Trust are vital to protect privacy.
If set up correctly, a Revocable Trust will not go through the probate process because the owner of the property (the Revocable Trust) did not pass away, just the person in the role of the Trustor or Grantor. In this situation, the successor Trustee will step in and handle the affairs of the Trust, including the distribution of assets.
Families often use Trusts to minimize inheritance taxes associated with the transfer of assets from parents to children or grandchildren. A Trust allows parents to remain in control of their assets while deciding on the distribution amounts and age restrictions of the beneficiaries. Trusts can also ensure peace of mind when they are created to protect assets and built lasting framework for a family’s wealth.
The key to a successful Revocable Living Trust is to create one best suited for the family’s needs and function properly over time to fulfill the wishes of the Trustor.
For more information on creating a Trust, call The Law Office of Arnold N. Hirsch at 480-832-3000 or contact us here.