One of the best estate plans is the revocable trust. It’s an estate planning document that creates a family entity. Assets are put into a revocable trust and are controlled by the family agreement. It’s attractive for the top reason that it helps all the assets in the trust avoid probate.
But the strength of a revocable trust plan can also be a weakness if not done properly. A revocable trust allows the family to control anything in it without the need to bring the assets to court for probate. But the important thing to note here is that people have to proactively put their assets in the trust to render them probate-free.
Everything needs to be named under the trust, even the real estate deed for a piece of real property. In the same manner, life insurance policies should also name the trust as the beneficiary of the policy to control the life-insurance money without probate.
The Biggest Mistake That People Make With Revocable Trusts
A revocable trust doesn’t magically control all the assets of a person. The latter needs to proactively name everything under the trust so that they can be transferred to the trust beneficiaries without the need for probate.
Although it’s easy to put all assets in the revocable trust at one time, people have the tendency to forget to add certain assets obtained in the future. One of the most common scenarios is when people have a house and put the property in the trust.
Several years later, they take the house out of the trust in order to sell it and buy another house or a different piece of property. People neglect to put that new real property back into the trust, which means that it will have to go through probate.
It’s important that the revocable trust is always at the back of a person’s head when buying new properties or obtaining assets. This is the only way to make sure that they are proactively put into the trust and can avoid probate in the future.