Revocable Living Trusts. A revocable living trust is a tool to avoid probate—a process that occurs at your death where the court helps settle your estate.
If you do not have a tax problem, and you do not have out-of-state property, then you probably do not need a revocable living trust because Washington has a very efficient probate process. As a result, the administrative hassles and cost of a revocable living trust often outweigh those of probate in Washington.
A revocable living trust does not in itself have any tax benefits, although these can be built in.
Special Needs Trusts. If you have a child with a disability, I strongly recommend setting up a special needs trust in your will that goes into effect at your death. This will ensure that the funds you leave to your disabled child will not disqualify them from receiving government benefits.
Other Types of Trusts. In addition to revocable living trusts, estate attorneys can create a variety of additional types of trusts to help you with estate tax planning goals.
For example, if you have a large estate, authorizing a credit shelter trust or disclaimer trust in your will is a relatively inexpensive way of saving estate taxes. If you have permanent life, an irrevocable life insurance trust (ILIT) may be an efficient way of avoiding estate tax on your insurance proceeds. (FYI—Insurance proceeds are generally not subject to income tax, but they may be subject to estate tax.)
Except for language authorizing a child’s trust in your will, most people do not need any trusts), but if you do have an estate subject to estate tax or a child with a disability, we can talk about your options.
Author: Alerian Hall
Estate Planning Attorney