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Revocable Trusts
More and more people are turning to the Revocable Trust as the basic document in their estate plan. As its name
implies, a Revocable Trust can be revoked at any time by the grantor, the one who establishes the Trust, so holding
property in the Trust is very much like owning it outright. Furthermore, the grantor typically acts as a trustee so that he
or she maintains complete control over the management of the property placed in the Trust.
Generally, the grantor tries to put as much of his or her property in the Revocable Trust as possible. Therefore, when
the grantor dies, the grantor's property in the Trust is disposed of in accordance with the Trust terms, and not in
accordance with the grantor's Will. There is no disadvantage in this because any instruction that can be set forth in a Will
can just as easily go in the Revocable Trust.
Why do people do this? The main reason is to avoid the court proceedings, costs and hassles associated with the
"probate" of a Will and the administration of probate property that passes under a Will. By contrast, the property held in
a Revocable Trust after the grantor's death can typically be administered without any court oversight or associated costs.
Of course, sometimes it is difficult to transfer everything that one owns to a Revocable Trust. As a result, grantors with
Revocable Trusts should also execute a simple Will directing that any property owned by the grantor at death be
transferred to the Revocable Trust. This would be a “pour-over” will.
Another benefit of a Revocable Trust is the flexibility it can provide if the grantor should become disabled, incapacitated
or incompetent. The trustees, who have been selected by the grantor, will typically have the ability to manage and
administer the grantor's property held in the Revocable Trust with greater flexibility than is provided by other methods of
managing an incompetent's property, such as guardianship, conservatorship, or under a durable power of attorney.
A major misconception about Revocable Trusts is that they can save on Estate Taxes. This is simply not true, as the
assets of a Revocable Trust are treated for Estate Tax purposes just as if they were owned outright by the grantor.
©2007-2011 Yardley Estate Planning, LLC. All rights reserved.
More and more people are turning to the Revocable Trust as the basic document in their estate plan. As its name
implies, a Revocable Trust can be revoked at any time by the grantor, the one who establishes the Trust, so holding
property in the Trust is very much like owning it outright. Furthermore, the grantor typically acts as a trustee so that he
or she maintains complete control over the management of the property placed in the Trust.
Generally, the grantor tries to put as much of his or her property in the Revocable Trust as possible. Therefore, when
the grantor dies, the grantor's property in the Trust is disposed of in accordance with the Trust terms, and not in
accordance with the grantor's Will. There is no disadvantage in this because any instruction that can be set forth in a Will
can just as easily go in the Revocable Trust.
Why do people do this? The main reason is to avoid the court proceedings, costs and hassles associated with the
"probate" of a Will and the administration of probate property that passes under a Will. By contrast, the property held in
a Revocable Trust after the grantor's death can typically be administered without any court oversight or associated costs.
Of course, sometimes it is difficult to transfer everything that one owns to a Revocable Trust. As a result, grantors with
Revocable Trusts should also execute a simple Will directing that any property owned by the grantor at death be
transferred to the Revocable Trust. This would be a “pour-over” will.
Another benefit of a Revocable Trust is the flexibility it can provide if the grantor should become disabled, incapacitated
or incompetent. The trustees, who have been selected by the grantor, will typically have the ability to manage and
administer the grantor's property held in the Revocable Trust with greater flexibility than is provided by other methods of
managing an incompetent's property, such as guardianship, conservatorship, or under a durable power of attorney.
A major misconception about Revocable Trusts is that they can save on Estate Taxes. This is simply not true, as the
assets of a Revocable Trust are treated for Estate Tax purposes just as if they were owned outright by the grantor.
©2007-2011 Yardley Estate Planning, LLC. All rights reserved.
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Michael J. Garry, CFP®, JD/MBA, owner of Yardley Estate Planning, LLC, is an
Estate Planning lawyer licensed in Pennsylvania and New Jersey whose practice
is based in Newtown, PA.
Estate Planning lawyer licensed in Pennsylvania and New Jersey whose practice
is based in Newtown, PA.