There is a significant amount of confusion about what estate planning is, especially when it comes down to what a revocable living trust does (and doesn’t) do for you. Let’s get started right now by going over what it can do. The first thing you should know—and it is undoubtedly the most important—is that a revocable living trust protects your ownership. By having one, you can keep ownership as opposed to giving up ownership.
This is essential, especially as we get older. We explain to our clients that you can have ownership and protection simultaneously. Accepting otherwise is a widespread myth. It is a path many people follow to their detriment. In other words, if you ever become incapacitated, you can grant others access while still owning your assets.
Here’s a Common Scenario You May Face
Rather than meeting with an estate planning attorney, you go to the bank because you want someone else to have access to your accounts in the event you become sick or incapacitated. Here is what you may be told: add your child to the account. Although this sounds easy, you have to understand that by doing that, you are giving up ownership of that account. It is a prime example of giving up ownership for the sake of protection. If you take away one thing from this blog, it is this: you do not have to give up ownership of your assets to have protection. Why? Because a revocable living trust allows you to retain ownership.
Many people ask us about how specific estate planning approaches impact their taxes. Regarding revocable living trusts, they aren’t going to change. Your property taxes will not be affected because you still own the house.
The Importance of Access
A revocable living trust can give someone else access and enable you to keep access. When you have a bank account titled in the name of your trust, that doesn’t mean you cannot use those funds at your discretion (if you are a trustee—which you can be). Let’s take it one step further. You and your spouse can be co-trustees. Therefore, if the worst should happen, your spouse will have no issue using that account despite it being in a revocable trust.
Additionally, you can have back trustees, such as one of your children, if both you and your spouse are incapacitated or have passed away.
Begin Your Revocable Living Trust
Here’s another mistake people make going into estate planning: they think they need a specific document. Although they may be right, they may need several others to act in harmony with it. Before you begin planning, ask yourself what you want. Allow J. Kevin Tharpe, P.C. to craft the estate plan that aligns with your goals. Contact us today to schedule your consultation.
Kevin Tharpe
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