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Pour Over Will | Durable Powers of Attorney Health and Assets | Revocable Trust | Irrevocable Trust | What You Shouldn't Do In Estate Planning

Simple Revocable Trust:

USE - Estate Planning

The Simple Revocable Trust can be described as a contract among three (3) people or groups of people:

  1. The Grantor - The person/entity who establishes the trust,
  2. The Trustee - The person/entity that will administer the trust pursuant to the terms and conditions of the trust,
  3. The Beneficiaries - The person/entities that the Grantor has selected to receive assets during their life and upon their death.

With a Simple Revocable Trust the client can be all three - grantor, trustee and beneficiary.

The Simple Revocable Trust is without question a powerful domestic estate planning device. Its advantages are so substantial that it is hard to describe them and be brief. Some of the primary advantages of the Simple Revocable Trust are:

  • The Simple Revocable Trust eliminates the probate process and all of its corresponding disadvantages.

  • The Simple Revocable Trust assures that the client can distribute their assets according to the client’s wishes, and not the wishes of another person. In addition, if the client desires, the client can pass their assets to those of the client’s choice over and extended period of time.  

    As an example, a frequently used distribution pattern is for the beneficiaries to receive one third of their inheritance upon the death of the client, one half of the balance five years later and the remaining balance five years after that. This pattern is frequently used to make sure the beneficiaries are not placed in a position of losing all of the assets at one time or inadvertently wasting the assets because of a lump sum gift to them.  Again, the choice is the client’s and the client can be as imaginative as the client wishes regarding how they may want to distribute their assets to those of their choice.

  • The Simple Revocable Trust can be amended at any time prior to death to take advantage of any changes in the client’s family circumstances, economic circumstances or take advantage or react to any changes in the law.

  • The Simple Revocable Trust allows the client to maintain full and complete control over their assets during their life.

The Simple Revocable Trust does have a major defect. It offers zero asset protection, zero income tax or capital gains tax planning, and is limited in its estate tax planning by certain rules and regulations. However, we will discuss where applicable how to gain asset protection, reduce income and capital gains taxes along with the elimination of estate taxes as we proceed.

Having said that there are defects, we still believe that the Simple Revocable Trust is an integral part of most estate plans.

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