There is more to crafting an estate plan than deciding what will happen to your assets after you die. A good estate plan can also help you and your family protect your assets and protect yourselves while you are alive. For example, an estate plan can include a health care directive and other documents that give legal force to your wishes about how you want to be treated if you are no longer able to speak up to yourself due to injury or illness.
Some people use their estate plans to protect their assets while they are alive and to smooth the process of transferring these assets to their heirs after they are gone. One way to meet these objectives is through a revocable trust.
A revocable trust, which is also known as a living trust, is a way of dividing ownership in property between a trustee, who manages the property, and a beneficiary, who can use the property in a way determined by the trust. For instance, the trustee may be a bank, a professional organization or a trusted friend who keeps assets in an investment account, and writes checks to the beneficiaries at regular intervals. Obviously, this arrangement provides income to the beneficiaries while they are alive, but it can also smooth the transition of the property to their designated heirs.
Unlike an estate transferred through a will, a revocable trust can largely avoid the process of probate. The trustee can simply begin transferring the property in the trust to the successor trustee named in the trust.
This type of trust can make the process of transferring property much easier for the heirs, saving them time and potentially a lot of money.