FOR IMMEDIATE RELEASE
Washington, DC, January 20, 2015 — “Once you embark on the estate planning journey, the question of whether to include a Revocable Living Trust in your plan is inevitable,” insists estate planning attorney Lisa Hughes, a long-time partner at the Fairfax, Virginia based law firm Yates Campbell & Hoeg LLP.
“Begin by learning the purpose of this tool and then determine if it makes sense for your plan,” suggests Hughes in the Estate Planning column of this month’s issue of BeInkandescent magazine.
Scroll down for our Q&A.
Question: What is a Revocable Living Trust?
Lisa Hughes: In a nutshell, a Revocable Living Trust (RLT) is a stand-alone document (separate from the Will and the Power of Attorney) that creates a trust entity in which the Settlor (the person creating the RLT) benefits during the Settlor’s lifetime,” Hughes explains. “And, the trust continues after the Settlor’s death for the benefit of the Settlor’s other beneficiaries.”
Question: How does a Revocable Living Trust work?
Lisa Hughes: A trust instrument can be likened to a box with an upper and lower chamber, as illustrated in the box on the right.
Question: Does it makes sense for you to incorporate a Revocable Living Trust into your estate plan?
Lisa Hughes: The answer to this question is part science and part art: The answer is, “It depends.” To find out if a RLT is right for you, answer the following questions. There are no “right” answers — only answers that are right for you!
- Is it important to fund the trust during the Settlor’s lifetime in order to avoid probate in the state in which the Settlor lives and/or in states where the Settlor owns real estate, such as a vacation home?
- Is it important to obtain privacy over the disposition of your property?
- Is it important to allow quick access to your assets in the event of your death or disability?
Question: What concerns generally do not warrant the use of a RLT?
Lisa Hughes: A RLT does not take assets out of reach of the Settlor’s creditors. Since the Settlor is the creator of the trust, he/she remains the beneficiary of the trust for the rest of his or her lifetime, and retains the right to revoke or amend the RLT. In essence, the RLT serves as the Settlor’s “alter ego” for asset protection purposes. Therefore, the assets contributed to the RLT do not enjoy any special protection when Settlors have creditor problems during their life, or when their probate estate is insufficient to pay their debts or expenses after they die.
Note that while asset protection planning with trusts exists in most states, the tools used for such planning differ markedly from the RLTs discussed here.
Do you have additional questions, ideas, other thoughts?
Read Lisa Hughes’ Estate Planning column in the monthly business magazine, BeInkandescent.
To interview Hughes, contact Hope Katz Gibbs.
About Lisa M. Hughes
Attorney Lisa M. Hughes is experienced at preparing Wills and trusts, Powers of Attorney, guardianships, and conservatorships; in administering estates of decedents and incapacitated individuals; and in the related tax and asset-protection planning. Her particular areas of focus include succession planning for closely held businesses, same-sex couples, and incapacitated beneficiaries, as well as certain elder-law challenges and trusts for those with special needs.
A graduate of Georgetown University Law Center, Hughes is licensed in the District of Columbia, Maryland, and Virginia, and has more than two decades of experience in estates, trusts, and wealth-planning.
Additionally, Hughes is a member of the Board of Governors of the Trusts and Estates Section of the Virginia State Bar; she is a Public Safety Trainer with the Commonwealth Autism Service; and she serves as legal counsel to Spectrum Housing Foundation, a tax-exempt organization that facilitates support for disabled adults.