If you have a revocable trust or living trust, best to check out what’s in it before you, your spouse and your children get a nasty surprise. And if you don’t have one but still want one, don’t sign anything that could have come from a vending machine.
Revocable Living Trusts can provide an excellent way to avoid probate and divide your estate after you pass away. But are they too good to be true? It all depends on where you get your revocable trust. These trusts can have serious flaws if they are not done properly. In an article titled " The black hole revocable trust" in Smoke Signals, an attorney details one of the flaws that these trusts can have.
The article tells a fairly typical story of a married couple getting a trust at a bank. The bank hands the couple a standard form to create the trust. However, the couple never takes the next step because no one tells them that they need to do so. They never actually put any of their assets into the trust, making it a completely empty trust. It is only when they end up with an issue that they think about the trust, and by then it is often difficult to put assets into the trust.
That is just one problem with standard trust forms you can get from the bank or download online. Another is that the standard forms normally do not contain provisions regarding when significant changes need to be made, such as needing to provide for a new child. You should not rely on standard forms to create your trust. If you do want a revocable living trust, go to an estate planning attorney and get a trust that is customized for you.
Reference: Smoke Signals (undated, within last week) "The black hole revocable trust"