Sometimes a person wants flexibility when setting up a trust. You can never predict how circumstances in your financial or personal situation might change in future years, and therefore it can be a good idea to create a set-up that allows some flexibility for the coming decades.
A revocable trust permits just that, since its provisions can be altered or changed completely by the person that set it up. It means that the trust is only used as a way to transfer assets to its beneficiaries after the grantor has passed away. While living, the grantor can earn income through the trust with the peace of mind that it will be transferred as planned in the event of the grantor's death.
The advantages of a revocable trust
Every revocable trust must have a chosen manager. Therefore, if the grantor becomes incapacitated or experiences ill health, he or she can be safe in the knowledge that the trust will still be in good hands.
Revocable trusts also offer a great deal of flexibility when it comes to being able to limit the amount that beneficiaries receive each year, so that they can be trusted to use their funds wisely.
The disadvantages of a revocable trust
The shortcomings of a revocable trust lie in the effort and often the complexity involved. It should also be maintained regularly to ensure that it is always up to date.
If you are interested in setting up a revocable trust, you should conduct adequate research into how it can be beneficial to your particular financial situation, and the wishes that you have for you beneficiaries.
Source: Investopedia, “Revocable Trust,” accessed Dec. 15, 2017 Posted on Estate Planning