RLT

Is a Revocable Living Trust really your Best Choice? 

Many people have attended a seminar or  have read an article that describes a revocable living trust (RLT) has the greatest thing since sliced bread.  The RLT has many advantages; however, it also has several disadvantages when compared to a Last Will and Testament (Will).  We will is consider both the advantages and disadvantages so that you can talk intelligently with a  legal professional about what might be the best choice for you. Advantages First, a fully funded RLT should avoid probate. Unfortunately, many people come to our law firm after the death of a loved one who has left one or more assets out of their RLT. Consequently, a probate is required for even a single bank account or brokerage account  left out of the RLT.  The good news is that the probate process in the state of Texas is a relatively simple and inexpensive process since Texas law provides for “independent administration” without court supervision or control as long as you have named someone as an independent executor. Second, the RLT provides a an excellent way to avoid an ancillary probate when someone owns out of state property. Anytime someone has real estate in a state other than Texas, that person should consider using an RLT.  We once had a client who owned five pieces of real estate in five different states. Can you imagine the additional cost and time necessary to handle an ancillary probate in each state? Third, the RLT is frequently used to avoid a will contest.  One of our clients had a 42-year-old son, a 38-year-old daughter and a 36-year-old daughter, but he also had four other children under the age of five and a 39-year-old second wife. Do you think it is highly likely that we might anticipate a will contest?  If someone is unhappy with the Will, that person can simply file a letter with the judge  saying that they believe it is not fair. Then, everything grinds to a halt until the Will contest is resolved. With the RLT,  The successor trustee handles the trust administration without any court involvement after the creator of the trust dies. Only if the person who is unhappy with the RLT (1) hires an attorney, (2) files a lawsuit and (3) convinces a judge that the successor trustee should be stopped, does the trust administration  become delayed. Fourth, the RLT can be of great mobility for those people who may move from state to state due to job transfers or retirement. The Last Will and Testament is designed for the state which you reside. The RLT is designed to cross state boundaries much more easily. Finally, the RLT is very helpful for someone who is suffering or is likely to suffer a long-term disability. Some financial institutions are reluctant to accept a financial power of attorney (also know as a Statutory Durable Power of Attorney), but we have never seen a financial institution refuse to work with a successor trustee of the RLT. When a disability occurs, the last thing you need is difficulty dealing with the financial institutions who are holding the assets needed […]