Revocable Living Trusts

A Revocable Living Trust (also known as a living trust or an inter vivos trust) is a document that allows its creator ("Settlor" or "Grantor" of the trust) to have a certain amount of flexibility that a Will does not afford.  Most revocable living trusts are completely under the Settlor's control during his or her lifetime - meaning the trust can be amended, revoked, etc. as long as the Settlor has the capacity to do so.  As a general rule, most people whose estate plans include living trusts may have three possible objectives in mind - probate-avoidance, privacy, and/or estate tax planning.

A revocable living trust can be used to avoid the cumbersome probate process, but only if the Settlor of the trust is proactive in a process known as "funding" the trust.  In order for a revocable living trust to serve as a probate-avoidance tool, all of the assets that would typically pass through an estate must either a) be transferred into the trust during the lifetime of the Settlor; b) be transferred into the trust by operation of law upon the Settlor's death; or c) be transferred directly to the intended recipient by operation of law.

Another benefit to incorporating a revocable living trust into your estate plan is the additional privacy it provides.  Assets that pass into the trust by operation of law (e.g. by beneficiary designation) and assets that are transferred into the trust during the lifetime of the trust's creator are not generally subject to probate.  As part of the probate process, the Executor or Administrator of your estate often must file certain documentation with the Circuit Court and with the Commissioner of Accounts.  Those filings become public records, which anyone can view and copy.  Therefore, anyone can know exactly what assets comprise your probate estate, the identity of the people to whom you left those assets, the bills paid by your estate after your death, etc.  Living trusts are private documents, and information about the trust terms and trust assets are available only to those who have some interest in the trust.  Therefore, many people choose revocable living trusts in order to keep their financial status and affairs private.

A third reason that many choose to incorporate revocable living trusts into their estate plan involves estate tax planning.  Tax law, particularly at this time, is a volatile area of the law.  If you believe that your estate may be subject to estate taxes, you should speak to an attorney as soon as possible.  If you are not proactive when it comes to estate tax planning, your estate may pay hundreds of thousands of dollars in taxes that otherwise would not have needed to be paid.

We can help you determine whether a revocable living trust is right for you.  Please feel free to contact us to arrange an appointment with an attorney.

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Irrevocable Trusts

Irrevocable Trusts come in various forms (e.g. Qualified Personal Residence Trusts, Irrevocable Life Insurance Trusts, etc.), but their unifying quality is that once they are created, they, in theory, cannot be un-created.  (Note: Virginia's adoption of the Uniform Trust Code does provide some avenues for the termination and modification of trusts, even irrevocable trusts, but this is only the case in very specific circumstances that are beyond the scope of this discussion.)

Because they cannot be revoked, irrevocable trusts afford unique opportunities for estate planning, particularly with regard to taxes and long-term care planning.  However, because they cannot be revoked, irrevocable trusts should be undertaken with a certain measure of deference.  We are more than happy to discuss with you any possible benefits you may receive by incorporating an irrevocable trust into your estate plan, and ask that you contact us to arrange an appointment.

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Living Trust Plus

Whether you are rich, poor, or somewhere in between, you cannot afford to ignore the potentially devastating costs of nursing home care and other types of long-term care.  Nursing homes are the most likely creditors, and often one of the most expensive creditors, that many will face in their lifetimes.  Only a handful of attorneys in Virginia can offer an estate planning tool that will allow you to possibly qualify for government benefits while preserving your assets for your family.  Please see the discussion regarding Asset Protection for more information about this unique type of estate planning tool that we can offer you. 

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