A revocable trust is a legal document that allows you to control the distribution of your assets in Georgia after you die. You can also use it to protect your assets during your lifetime. But, there are many myths and misconceptions about revocable trusts, often coming from hearsay, which can cause you to make a misguided decision.
Facts about a revocable trust
The term revocable means that the creator of the trust can modify the terms or terminate it at any time while they are still alive. However, when they pass away, the terms of the trust become irrevocable, meaning the assets in the trust can no longer be modified or distributed outside of the terms of said trust.
Revocable trusts can help your loved ones avoid probate. Probate is the process of distributing your assets after you die. It can be a long (up to six years) and costly process, which is why many people choose to use a revocable trust to avoid it.
Many people believe that revocable trusts are often used in estate planning by high-net-worth individuals. However, they can benefit anyone who wants to control how their assets are distributed after they die. Through its healthcare directive and financial power of attorney, you can also use it to guide people on how you want to be treated when incapacitated or how your finances (or business) should be handled.
Another common myth is that a revocable trust can help you avoid estate taxes. Sure, if your estate is large enough, a revocable trust can help you minimize the amount of taxes your loved ones will have to pay. However, the property in the trust will still be treated as yours, both for income and estate taxes.
Believing that a revocable trust will protect your assets from creditors is also false. Creditors could still go after the assets in your trust if you have unpaid debts.
While a revocable trust has many benefits, it’s important to understand that it’s not a cure-all for estate planning. However, by understanding what it can do for you, you can make an informed decision on whether it’s the right tool for your estate planning needs.