Good question. Many of our clients who run a basic Google search on estate planning prior to coming in for an initial meeting read about the benefits of Revocable Living Trusts and ask this question almost before I can finish introducing myself! Do you need a revocable living trust? Maybe, and maybe not.
In some states, probate – the act of “proving” your Last Will and Testament and administering its terms under court supervision – is a horrible, expensive, frustrating nightmare, so estate planners help their clients plan to avoid probate. How? A Will only governs how the assets titled in your individual name pass following your death. If assets are not titled in your name when you die, the Will does not govern their disposition and probate will be unnecessary; so, to help their clients avoid ownership of property in their individuals' names upon death, attorneys provide their clients with Revocable Living Trusts.
Revocable Living Trusts and Georgia Residents
A Revocable Living Trust is a document signed during the creator’s lifetime, and it typically names its creator (“Donor”) as the initial Trustee. During the lifetime of the Donor/Trustee, he or she may do whatever he or she desires with his or her property (assuming he/she has mental capacity to do so). Upon the Donor’s incapacity, the trust provides for the management of his/her assets for his/her benefit. Following the Donor’s death, the trust provides for the distribution of the Donor’s estate pursuant to his/her expressed wishes. And here’s the key: following the creation of the trust, the Donor retitles most* of his or her assets (e.g. bank and investment accounts, houses, etc.) in the name of the trust. In other words, the Donor calls his bank and explains that, instead of his investment account being titled in the name of “John Smith,” it should instead be titled in the name of “The John Smith Revocable Trust.” If there are no assets titled in an individual’s name when he/ she dies, probate will not occur.
If you’re a Georgia resident, here’s the good news: if you have a properly-drafted Will with certain magical language that the Court will want to see, probate is relatively easy and inexpensive. Practically speaking, if you have a Will or a Pour Over Will with a Revocable Living Trust, the administration of your estate will involve about the same amount of effort. Does this mean you do not need a Revocable Living Trust if you’re a resident of Georgia or another “easy probate” state? Not necessarily. There are significant advantages to putting a revocable trust in place, even if you do not care about avoiding probate. To name a few:
When you die, your Will goes on the public record. Anyone off the street may walk into the courthouse, obtain a copy of your Will, and read what it says, who receives your estate, how they receive it, and who is in charge. If you have a Revocable Living Trust, your trust allows your private wishes for your estate to be maintained off of the public record. This is important to keep in mind for purposes of keeping both strangers and potentially disappointed family members out of your personal business.
Probate might be just fine in Georgia, but if you own real estate outside of Georgia (or wherever your home state is), probate will be required in each state where you own real property following your death. Signing a Quitclaim Deed from yourself to your Revocable Living Trust, however, allows the avoidance of out of state (or “ancillary”) probate. It’s just that easy.
While a Power of Attorney allows an individual to designate a person to manage life’s business for him or her in the event of incapacity, a Revocable Living Trust may provide not only for a non-judicial process (i.e. no court involvement) for the determination of one’s incapacity, but also for a more seamless transition of the management of one’s assets in the event of incapacity than a Power of Attorney.
It’s important to remember that Revocable Living Trusts are indeed Revocable. This means that the trust’s Donor may take comfort in the fact that the terms of his or her trust are not set in stone: as long as the Donor is alive and has mental capacity, he or she may revoke and/or amend his or her trust at any time.
Contact Cohen Pollock Merlin Turner, Atlanta Trust Attorneys
Speak with an attorney today to determine if you should have a Revocable Living Trust; or, if you already have one, see if your trust needs an update as a result of the passage of the 2017 tax laws. Call Cohen Pollock Merlin Turner, trust attorneys in Atlanta, today to set up an appointment.