Q: What is a Revocable Trust and why is it so popular?
A: A person who creates a modern New Hampshire estate plan using a Revocable Trust (or Living Trust) can avoid probate administration and provide privacy for the family. Unlike many assets owned by the decedent upon his or her death, assets titled in the name of the Trust bypass probate altogether. Generally, a Revocable Trust is used in combination with a “pour-over” Will, which provides that any assets not already in the Trust, are to be “poured over” to the Trust, making it the centerpiece of your estate plan.
Traditionally, the Probate Court serves a role by supervising the administration estate of a decedent’s estate. However, the Will, along with the inventory of the estate and related filings are public documents, lacking the privacy that some may desire. Moreover, the probate process can be time consuming and expensive for the family
Designed appropriately, the combination of a pour over Will and Revocable Trust allow the executor to bypass many or all of the more onerous aspects of probate administration. In most circumstances, the Revocable Trust (and an inventory of its assets) are not filed with the Probate Court and do not become public documents.
A Revocable Trust provides several additional benefits. For example, a Revocable Trust can allow a person to maintain post-mortem control over assets without the administrative complexity of creating a Trust upon death, i.e., a “Testamentary” Trust. A Revocable Trust can hold assets in trust for the benefit of children, grandchildren or others, to avoid beneficiaries receiving inheritances in a lump sum. The Trust can make provisions for spendthrift beneficiaries or those with special needs. A Trust can be used to manage the family business, implement an appropriate succession plan, or ensure its orderly sale.
Revocable Trusts are excellent options for couples with children from prior relationships, allowing each party to provide for her or her children separately, while still making lifetime provisions for the surviving spouse. Revocable Trusts are especially useful for couples who may be facing federal (and state) estate tax or may need to do some advance planning for retirement plan assets.
New Hampshire’s progressive Trust Code provides individuals with a robust legal framework to design and implement simple probate avoidance estate plans, or accommodate the most sophisticated and customized solutions for those with more complex needs. Revocable Trusts are powerful and flexible tools and should be a key component to a modern New Hampshire Estate plan.
Know the Law is a bi-weekly column sponsored by McLane Middleton. Questions and ideas for future columns should be emailed to [email protected]. Know the Law provides general legal information, not legal advice. We recommend that you consult a lawyer for guidance specific to your particular situation.