Residents of Alabama planning for their future might want to create a trust. A trust is a valuable part of estate planning. If you’re considering a revocable trust, you should know the pros and cons that come with it.
What is a revocable trust?
During estate planning, you might consider creating a revocable trust. It allows the grantor to change certain provisions and add or remove property and assets throughout their life. Beneficiaries are named by the grantor, but those named don’t receive property from a revocable trust until the grantor’s death. However, if the grantor becomes incapacitated and can no longer manage the trust, a trustee will oversee it. A revocable trust acts very much like a will.
What are the pros and cons of a revocable trust?
Estate planning in Alabama with a revocable trust offers certain pros. The trust can avoid probate after the grantor has died. This means that property and assets held in the trust can directly go to the beneficiaries without the court intervening.
If the grantor is no longer able to manage the trust due to becoming incapacitated, a trustee they have named can take over and manage it on their behalf.
Revocable trusts are flexible as they can be changed at any point during the grantor’s lifetime. They can also bypass jurisdictional limits.
Unfortunately, there are also cons to having a revocable trust. One of them is that they don’t offer any tax benefits. Also, unlike irrevocable trusts, they lack protections for assets that are held within them. As a result, if the grantor is heavily in debt, their creditors can seize assets that are held in their revocable trust.
Revocable trusts don’t always adapt to circumstances that have changed. As a result, the grantor will have to make changes to protect the trust.
A revocable trust may not be appropriate for everyone. If you are considering creating a trust, do your homework to determine which type is better for your situation.