Planning for Tomorrow
With Skill & Integrity

Why a Revocable Trust May Be for You

What is a revocable trust? Many people talk about trusts, but have little idea to as what they are or how they operate. McKelvey Law Offices, LLC is here to help.

  1. Basics

A revocable trust is an inter vivos trust. Inter vivos means between living persons; as a gift made between one living person to another. A revocable trust in short is a “Living Trust.” This means it is created during the lifetime of the settlor. The trust creator is called a settlor or a grantor. A revocable trust is an alternative to a will.

Revocable Trusts will appoint a trustee to manage the assets of the trust. The trust will also include beneficiaries. Beneficiaries are the ones entitled to receive the assets according to the terms of the trust.

A key feature of the revocable trust is that the settlor retains the power to revoke the trust and reacquire its assets. A revocable living trust may be (1) unfunded, which would require a pour-over from a will, (2) fully funded or (3) partially funded. An attorney will discuss what is the best course of action in regard to funding in accordance with the client's wishes. At the time of the settlor's death, the revocable trust may continue or dissolve and the assets distributed to the beneficiaries without having to go through probate. Finally, a revocable trust is a tax-neutral trust in which the grantor is treated as the owner of the trust assets for income, gift and estate tax purposes.

  1. Why Use a Revocable Trust?

Management

When a revocable trust is funded, the settlor has current and future management of trust assets.

Avoiding Probate

Assets within the revocable trust at the time of the settlor's death are not subject to probate administration. The client will possibly save on extensive costs that come with the probate process.

Privacy

A revocable trust is generally private and not public record. However, the trust assets and the terms may become public once filing a Pennsylvania Inheritance Tax Return.

These three advantages are not the only benefits that a revocable trust offers. However, I believe these are the most important for a client to consider when deciding on their estate plan. It is important and worth noting that a revocable trust is not for everyone and should be discussed with a licensed Pennsylvania attorney and Certified Financial Planner.

A revocable trust is not always the best option. A revocable trust has little to no estate tax or Pennsylvania inheritance tax benefits a client can utilize. Also, a client will pay costs for an attorney to draft the trust. Finally, it will cost the client to transfer their assets into the trust.

  1. Where to start?

Contact McKelvey Law Offices, LLC if you are interested in having a revocable trust drafted. Trusts are complex legal documents that should be drafted by an attorney. Our mission is to plan for your future and maximize your opportunities.