Why do I need a Revocable Trust?
A Revocable Trust has three main benefits:
Transfer Property + Avoid Probate
Like a Will, a Revocable Trust can transfer property after your death. It acts as a Will substitute. We structure the Trust Agreement to take certain actions that resemble the transfers within in a Will upon your death.
Unlike a Will, a Revocable Trust avoids Probate. The court does not oversee the transfer of property within a Revocable Trust. The Probate process will only touch upon property that you own. Because the Trustee retains legal title to the property, and the Beneficiaries retain equitable title, you do not actually own any Trust Property (as long as it is correctly titled within the Revocable Trust). So, any property within the Revocable Trust escapes Probate.
The benefits of avoiding Probate cannot be overstated. Probate delays the transfer of your property and is a high cost to your estate.
For Arizona Informal Probate, (the most common route), it takes about nine months before property from your estate can be distributed. Your family and loved ones must survive this period without your support. That is the best case scenario. If someone believes that they are entitled to more of your property or questions the validity of your Will, then you many have to enter Formal Probate. This is a more intense, supervised version of probate. And can take up to two years before your property can be transferred. While the delay in the transfer is devastating, what is worse is the infighting and emotional toil among family that this long process creates.
Probate is substantially more expensive than executing and managing a Revocable Trust. For Informal Probate, your Personal Representative will spend hours adhering to the Probate Court’s requirements and is entitled to compensation for that time. If they need to hire an attorney or estate planning advisor to help, then the cost increases even more. For Formal Probate, it is almost certain to require hiring an attorney until Probate is finished to help defend against the outsider’s changes to the estate plan.
By choosing a Revocable Trust, you pay an upfront fee now to Avoid Probate, allowing your estate to distribute your property in weeks not months or years and to prevent catastrophic costs later.
Complete Privacy
When a Will enters Probate, it becomes a part of the public record. As a public record, anybody can access your Will and its contents. Your assets, your distributions, your burial wishes, your chosen guardians, your beneficiaries - all available to the world. Further, Probate proceedings are public. So, anything presented to the Probate Court is also a part of the public record. This means your family’s testimony, any creditor claims, infighting, and how the Probate Court resolved these issues become public. A Will-based plan without a Revocable Trust creates a lot of unneeded publicity after your death. For some, this publicity, understandably, influences their decisions.
A Revocable Trust is private. Because a Revocable Trust does not enter Probate, it is not a public document. This creates anonymity - your affairs, your property, and your information can stay within the Trust and accessed only on a need to know basis. You can distribute how you see fit without public scorn. Other people cannot access your finances, the value of your assets, or where your property is located. Bad actors cannot use your sensitive information.
Flexibility
A Revocable Trust offers unmatched flexibility in managing your affairs: you can adjust it and its property, actively receive benefits from it during your life, and use it to protect against Incapacity or emergencies.
A Revocable Trust is just that - revocable. The Trust itself can be edited or terminated. And the property that the Revocable Trust holds can be moved freely inside or taken out of it. This flexibility means that it can adjust during your life as circumstances change.
You also receive benefits from the Revocable Trust as you are alive. Our basic structure has you operate as Trustee and be a Beneficiary during your life. Because you are Trustee of your Revocable Trust, you manage the property within the Trust on behalf of the beneficiaries. But you also are one of its beneficiaries, so, acting as Trustee, you can use trust Property for your own benefit. This structure is quite similar to your own ownership of the property but provides post-death benefits described above.
Further, a Revocable Trust is active the second it is executed with funded property. This instant “activation” offers so much more flexibility than a Will, which requires your death before the document is “activated.” Importantly, this protects against your Incapacity (where you can no longer act for yourself). The Successor Trustee of your Revocable Trust can step in and manage your affairs for you with the rules outlined by the Revocable Trust - just as you were before your Incapacity. If you only have a Will and a Durable Financial Power of Attorney, then your Power of Attorney can act in your best interest but may not have the instruction manual of a Revocable Trust.
