Question: My mom has a revocable trust and she transferred the ownership of her house to the trust. She wants to make sure that I inherit the house. Is the revocable trust the proper vehicle to accomplish this?
Answer: Revocable Trusts have become increasingly popular planning tools for individuals who are interested in avoiding probate, and who are concerned with the orderly and private administration of their assets at the time of their death.A revocable trust is a trust that you create during your lifetime and gives the grantor great flexibility as the grantor can be their own trustee.This allows the grantor to maintain complete control over the assets during his or her lifetime.
With a Revocable Trust, assets can be transferred in and out of the trust at any time.The grantor has the ability to change, revoke or amend the trust without anyone else’s permission.The revocable trust can hold assets such as real property, non-qualified investment accounts, bank accounts, certificates of deposit, life insurance policies and non-qualified annuities.It should be noted, that qualified retirement accounts should never be transferred to a revocable trust as it would cause a taxable event.
In the event of incapacity or death of the grantor, the revocable trust can provide a successor trustee which would provide for a seamless transition for the management of affairs.Additionally, the avoidance of probate allows for an orderly administration of the assets.If probate is needed, your Executor would need to file your Last Will and Testament with the Surrogate’s Court.All interested distributes would need to be noticed of the proceeding and could file objections.This could result in a delay and costly proceeding.With a trust, unlike a Probate Proceeding, there is no notification required when a Trust is administered.Your trustee can simply distribute the assets as you have set forth in the trust agreement.
Because the grantor of a Revocable Trust maintains complete control over the assets in the trust during their lifetime, and in most cases, acts as trustee of their own trust, it is important to know that assets held in the trust are considered completely available to the grantor. Accordingly, these assets will also be considered completely available should the creator need long term Nursing Home care.
– Nancy Burner, Esq. and Robin Burner Daleo, Esq.