Joint Revocable Living Trust: A Great Alternative
There is an excellent alternative to traditional wills. Wills do handle the disposition of assets upon a death, but they are also subject to the probate process. That process means that the assets to be transferred will be subject to taxes and to the lack of privacy that accompanies probate, since those records are public. The easy alternative to wills is a simple Joint Revocable Living Trust. This instrument is a single trust established by a husband and wife with different and separate trust shares for each party.
Typically, the partners are both grantors and trustees, meaning that they will control how the assets in the trust will be managed in their respective lifetimes, as well as at the time of death. In addition to being a will substitute, a Joint Revocable Living Trust also functions beautifully as a disability planning mechanism. The Co-Trustee or Successor Trustee will automatically take control of the trust assets during periods of incompetence or disability. A spouse or adult child is often designated at the Co- or Successor trustee. This seamless transfer of authority eliminates the conservatorship hearings that often need to occur in these situations.
There are huge tax advantages to consider when establishing trusts. Funding a trust in Ohio is different than the same process in Nevada, and Indiana tax laws are not the same as those in Massachusetts, but federal law supersedes all those conditions and allows for a one and a half million dollar estate tax exemption for each spouses share of assets upon death. A properly structured trust can eliminate the tax liability entirely for the surviving spouse or other beneficiaries. As is the case with traditional wills, it is possible to make specific bequests in a trust instrument.
One of the other flexible characteristics of trusts is the ability that the grantors have to establish what is commonly called a 'dynasty trust'. A Joint Revocable Living Trust can be established by the grantors to hold some or all of the trust assets in the trust for a generation past their own children. This method allows the trust to hold assets for the life of known heirs, or for the lifetime of their children (issue). These trusts are known as generation-skipping trusts and are quite popular.
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