What is a revocable living trust?
You've likely heard a NY estate attorney throw out this word a few times. It's the new "will", if you may.
But what does it mean?
The whole concept sometimes sounds a lot more complicated than it really is. And you'll likely hear New York estate planning attorneys sing the merits of the revocable living trust.
So, let's look at the concept. A revocable living trust is nothing more than an estate planning document. Think of it as a basket you create, to hold all your assets. When you pass away, you've presumably designated who will take over the basket and disburse of its contents. But in your lifetime, you're the basket holder and have full authority to take things out of that basket, or to put things into that basket.
The difference between a trust and a will isn't as stark as many New York estate planning lawyers would have you believe. They're both documents. And neither of them can shield you from estate tax. But what a revocable living trust can do is shield you from probate court (or in New York, Surrogate's Court).
Well, some of the time, at least.
There are two points to remember, in order to plan your revocable living trust effectively.
For starters, you need to make sure that the next basket-holder, or your "successor trustee", is responsible enough to manage the trust when you are no longer able to.
The next item you need to consider is the funding of the trust. Many New York estate planning lawyers will draft a trust, but the funding is the important step.
It's phase two. It's the act of actually placing the items in your basket, while drafting the trust is simply creating the basket.
We'll discuss the issue of funding the trust in a separate blog post, coming soon!