Scott Estate Law, P.A., Routinely Drafts Revocable Living Trusts
What is a Revocable Living Trust?
Scott Estate Law routinely drafts Revocable Living Trusts (“RLTs”), which can help clients minimize the costs associated with probate and, in some cases, avoid probate altogether. Under this estate planning approach, the client transfers assets into a trust during his or her lifetime, and the assets held by the trust are distributed pursuant to the terms of the trust agreement following the client's death. The client retains the right to amend, revise, or revoke the trust at any time.
How a Revocable Living Trust Can Avoid Probate
If properly funded, a Revocable Living Trust can frequently avoid the probate process altogether and save thousands of dollars in legal fees and administrative costs often associated with probate proceedings. In order to avoid the burden of retitling assets each time an RLT is revised or restated, the trust will typically retain the same name while using an updated execution date. As an additional safeguard, the client also executes a short “Pour-Over Will” designed to transfer into the trust any assets acquired after the execution of the Revocable Living Trust that were never properly titled in the name of the trust during the client's lifetime.
What is included in a Basic Revocable Living Trust Package?
A Revocable Living Trust is generally viewed as an alternative to a Last Will and Testament as an estate planning trust. We generally prepare Revocable Living Trusts on a flat fee basis. The basic Revocable Living Trust package includes, among other things:
- The Revocable Living Trust
- An Assignment of Personal Property
- A Pour-Over Will
- A Certification of Trust document
- Funding Instructions
- Personal Property Memorandum
Circumstances When the Firm Recommends Revocable Living Trusts
Although some attorneys recommend Revocable Living Trusts to virtually all clients, we take a somewhat more measured approach. As fiduciaries, we believe our obligation is to place our clients' financial interests above the firm's interests. A Revocable Living Trust is generally more complicated and expensive than a traditional Last Will and Testament and frequently requires additional effort to properly implement and fund.
When a Last Will and Testament May Be Sufficient
In our professional opinion, a comparatively less expensive Last Will and Testament is often more than adequate for many individuals. We frequently encounter clients who have delayed preparing estate planning documents for many years, and sometimes even decades. In those situations, we are hesitant to introduce unnecessary complexity into the estate planning process out of concern that the client may further delay completing an estate plan altogether.
Common Circumstances Where a Revocable Living Trust May Be Recommended
As a general rule, we recommend and/or prepare Revocable Living Trusts when one or more of the following circumstances are present:
- The client owns real property in more than one state;
- The client intends to disinherit a natural heir, such as a child; and/or
- The client has had a prior unpleasant experience with probate during the administration of a relative's estate and expresses a strong desire to avoid the probate process.
Clients Who Own Real Property in Multiple States
For example, if a client resides in Maryland but also owns a vacation home in Delaware or New Jersey, we would frequently recommend a Revocable Living Trust. Upon the client's death, it would usually be necessary to open a probate estate in Maryland. In addition, because the client owns real property in another state, it would also generally be necessary to open a second probate proceeding — commonly known as an ancillary estate — in the state where the additional real property is located.
Avoiding Multiple Probate Proceedings
If the client owned real property in three different states, it could become necessary to open three separate probate proceedings in multiple jurisdictions. Many individuals consider this to be an unnecessary burden and expense for surviving loved ones. By transferring the properties into a properly funded Revocable Living Trust, the client may be able to avoid probate proceedings altogether. Under those circumstances, a properly funded Revocable Living Trust can potentially save substantial legal fees and help grieving family members avoid many of the distractions, delays, and frustrations that often accompany probate administration.
Disinheriting a Natural Heir
We also frequently recommend Revocable Living Trusts where a client intends to disinherit a natural heir, such as a child. In Maryland, the threshold for initiating a challenge to a Last Will and Testament can be relatively low. In some cases, a disgruntled heir may be able to persuade counsel to initiate a Will challenge — known as a caveat proceeding — after paying only a relatively modest retainer.
Privacy and Added Protection Against Estate Challenges
By contrast, trust litigation generally must be filed in the Circuit Court, where litigation expenses and procedural burdens are often substantially greater. Furthermore, the size of a decedent's probate estate is generally a matter of public record. A disgruntled heir may be more inclined to challenge a Will where it appears that the estate contains substantial assets. By contrast, assets held within a properly funded Revocable Living Trust are generally far less visible to the public, making it more difficult for a potential challenger to readily determine the approximate size of the decedent's estate.
Trust Planning
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