February 2022 Issue: What Advisors need to know About Revocable Trusts-What Advisors need to know About Revocable Trusts by Martin Shenkman

What Advisors need to know About Revocable Trusts by Martin Shenkman

Pdf Summary

Revocable trusts, also known as living trusts or loving trusts, can be a valuable tool in estate planning when properly applied. A comprehensive estate and financial plan centered on a revocable trust can address important legal, personal, financial, and other needs of clients. However, revocable trusts are often misused and only considered as a document to avoid probate. It is important for financial advisors to understand the various applications and benefits of revocable trusts to better assist their clients and enhance their role in the estate planning process.<br /><br />Fear tactics surrounding probate and the high costs associated with it are often used to promote revocable trusts. However, advisors can educate their clients on the misleading nature of these scare tactics. There are ways to minimize probate costs, such as naming family members as executors or trustees who may not charge a fee or hiring an attorney on an hourly basis instead of a percentage of the estate. Proper planning and addressing family dynamics can also help avoid probate fights and reduce costs.<br /><br />In addition to avoiding probate, revocable trusts offer other benefits to clients. They can involve others as co-trustees to provide checks and balances and protect against financial exploitation. Revocable trusts with distinct names and tax identification numbers can also help reduce the risk of identity theft. By consolidating and simplifying client accounts, the risks of attack and monitoring become easier.<br /><br />Revocable trusts can also be used to protect aging or infirm clients. By appointing co-trustees, including a trust protector, and requiring independent professionals to provide reports or accountings, the client's assets and well-being can be safeguarded. Financial advisors play a crucial role in developing and administering revocable trust plans, ensuring their clients' dispositive schemes work economically, beneficiary designations are in order, insurance needs are met, and non-qualified assets are properly consolidated into the trust.<br /><br />Overall, revocable trusts offer more than just probate avoidance. They provide an array of protections for clients when used in conjunction with a well-designed estate and financial plan. Financial advisors can guide their clients in implementing these trusts and advise on related matters, contributing to a comprehensive and effective estate plan.

Keywords

Revocable trusts

estate planning

comprehensive plan

financial advisors

probate avoidance

family dynamics

financial exploitation

identity theft prevention

consolidation of accounts

aging clients