Revocable trusts, commonly called “living trusts,” are an effective estate-planning tool for avoiding the costs and hassles of probate, preserving privacy and preparing your estate for ease of transition after you die.
A trust is a legal document that authorizes a trustee, who can be the grantor (or the creator of the trust), to hold title to and manage assets. The grantor retains the ability to revise the trust up until death.
Unlike in a will, assets in a living trust will generally pass to heirs sooner. In many states — though not all — the process by which a will is probated through the courts is lengthy and expensive, says Russell Fishkind, partner at law firm Saul Ewing and author of “Probate Wars of the Rich and Famous.”
“Transferring assets into a trust could save months and thousands in legal fees,” he adds.
But aside from easing the burden and cost to loved ones, there are a few facts about living trusts that might surprise you. For example, did you know that the limit for Federal Deposit Insurance Corp. protection on bank accounts within a trust is higher than it is for an individual? Or, that certain assets should not be titled in the name of the trust?
Read on for 6 little-known facts about living trusts.