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Integrating Estate Plans into Your Wealth Management Strategy
Integrating estate planning into your financial plan can help align investments, retirement, and tax strategies with long-term goals. Learn more.
Thinking about a revocable living trust? Learn how it can support your estate plan with privacy, control, and flexibility for you during your life and for your heirs after your death.
When to Use a Revocable Living Trust in Your Estate Plan
A revocable living trust is a legal arrangement that allows you to transfer ownership of certain assets to a trust during your lifetime, while still maintaining control over them. Because the trust is revocable, it can be changed or dissolved at any time during your life, making it a flexible option in certain estate planning scenarios.
This type of trust is often used to support both lifetime management of assets and the future transfer of wealth.
Although they may not be the right choice for every estate plan, revocable trusts are commonly used when:
Revocable living trusts are just one part of the estate planning toolkit. In this blog, we explore how they work, where they may add value, and what to consider if you're evaluating whether this strategy fits into your broader plan.
What Is a Revocable Living Trust?
A revocable living trust is a legal mechanism that allows an individual—the grantor—to transfer ownership of his or her assets to a trust that the grantor controls during his or her lifetime. One of its primary features is flexibility—the grantor can change or revoke the trust at any time, as long as they remain mentally competent.
Unlike irrevocable trusts, a revocable living trust does not remove assets from the grantor’s taxable estate, which means it typically does not provide direct estate tax advantages. However, when properly funded, it may help streamline asset transfer and reduce administrative hurdles, and it can potentially help the grantor optimize his or her available estate tax exemptions and deductions.
Features of Revocable Trusts
- Revocability – The trust can be modified or dissolved at any time during the grantor’s lifetime
- Probate avoidance – Assets held in the trust can be distributed directly to beneficiaries without going through probate
- Continued control – The grantor often serves as the initial trustee and beneficiary, maintaining control over the assets
- Incapacity planning – A named successor trustee can step in to manage assets if the grantor becomes incapacitated
- Privacy – Unlike a will, a trust typically does not become part of the public record upon death
- No direct estate tax benefits – Assets remain part of the taxable estate unless additional planning steps are taken, but revocable trusts can be crafted to help better utilize the grantor’s state and federal estate tax exemptions.
Situations Where a Revocable Living Trust May Be Worth Exploring
Below are several common scenarios where individuals and families may consider using a revocable living trust:
Young or Irresponsible Beneficiaries
In many circumstances, it might not be advisable to bequeath assets directly to a beneficiary, especially if the beneficiary is young or is otherwise financially unsophisticated. A trust provides a mechanism for a trusted third party (the Trustee) to invest and otherwise manage the assets on behalf of the beneficiary, and to make periodic distributions to the beneficiary on an as-needed basis. This helps prepare for the grantor’s family to be properly cared for, while managing the risk that the assets will be squandered.
Owning Property in Multiple States
If you hold real estate in more than one state, your estate may be subject to multiple probate processes—one in each jurisdiction where property is located. A revocable living trust can help streamline estate administration by allowing those properties to pass through the trust, avoiding separate probate proceedings. This may reduce costs, delays, and administrative complexity for your heirs.
Blended Family Dynamics
In blended families, a revocable living trust can provide a way to address the needs of multiple family members—including a surviving spouse and children from previous relationships. The trust can be structured to outline who receives what, and when, helping reduce confusion or potential conflict. It may offer more flexibility and clarity than a will alone in regard to your wishes being carried out as intended.
Desire for Privacy
Unlike a will, which becomes part of the public record through probate, a revocable living trust is generally private. For individuals or families who prefer to keep financial and personal matters confidential, this can be a compelling reason to include a trust in their planning. Details about beneficiaries and distributions typically remain outside of court filings.
Business Ownership
For business owners, a revocable trust can help maintain continuity and control in the event of incapacity or death. By transferring business interests into the trust and naming a successor trustee, owners can lay out how the business should be managed or transitioned. This can be especially valuable when paired with a broader business succession plan.
Supporting a Loved One with Special Needs
When planning for a beneficiary with special needs, it’s important to balance financial support with eligibility for government benefits. A revocable trust may allow you to incorporate special provisions to provide consistent care and oversight of your loved ones with special needs without disrupting benefits like Supplemental Security Income (SSI) or Medicaid.
Estate Tax Planning
Merely establishing and funding a revocable trust does not provide direct estate tax benefits. However, if properly drafted and funded, revocable trusts can help married couples optimize various estate tax exemptions and deductions, which might potentially help reduce the estate tax burden at death. While estate taxation is outside the scope of this blog post, it should be noted that properly drafted revocable trusts are a common feature in the estate plans of families that expect to have large estates that could be subject to estate taxation.
Costs and Considerations
While revocable living trusts can provide flexibility and administrative convenience, they do come with costs. It’s helpful to weigh these expenses carefully in relation to your planning needs.
- Initial setup fees: Legal fees can vary depending on the complexity of your estate.
- Ongoing maintenance: Periodic updates, asset transfers, and trustee oversight may require continued attention or professional involvement.
- Professional support: Attorneys, estate planning advisors, and tax professionals may be involved in establishing and maintaining the trust.
- Tax implications: Revocable trusts typically do not change income or estate tax obligations during your lifetime. However, they may work alongside other planning tools that address long-term tax strategies.
- Cost vs. benefit: The value of a revocable trust often depends on your estate size, complexity, and goals—especially when weighed against the cost of probate or court-managed guardianship.
An estate planning professional can help you assess whether the long-term advantages of a revocable trust justify the associated costs, given your specific goals.
Creating a Trust: Your Roadmap to Getting Started
Setting up a revocable living trust is a coordinated process that involves executing legal documents under the supervision of an attorney, transferring assets, selecting the right people to manage them, and aligning the trust with the rest of your estate plan. Here are some of the steps involved:
- Funding the trust: Transferring ownership of assets such as real estate, bank accounts, and investments into the trust’s name.
- Choosing a trustee: You can serve as your own trustee, but selecting a reliable successor trustee is key for long-term management.
- Coordinating with other documents: Wills, powers of attorney, and healthcare directives should align with your trust to avoid conflicts.
- Maintaining the trust: Life changes, such as marriage, divorce, or acquiring new assets, may warrant updates to your trust.
- Retitling and designations: Assets must be retitled properly, and beneficiary designations must be reviewed to ensure beneficiary-designated accounts are coordinated with the trust instrument.
At EP Wealth, our advisors work with individuals and families to help coordinate trusts, tax planning, and long-term goals—so each piece of your plan works together with clarity and purpose.
Coordinating a Trust with Your Broader Estate Plan
A revocable living trust is often just one element of a well-rounded estate plan. For the trust to function as intended, it should work in coordination with other documents. If any assets remain outside the trust during your lifetime, a pour-over will can help direct them into the trust upon your death.
A durable power of attorney authorizes someone to manage financial matters that fall outside the scope of the trust during your life. Healthcare directives, including a living will and medical power of attorney, provide guidance on medical decisions if you become incapacitated.
It’s also important to review beneficiary designations on retirement accounts, life insurance policies, and other assets to confirm they align with your trust and broader estate goals.
Finally, regular reviews and updates are essential to keeping your plan current as your life circumstances—and the law—change over time.
Is a Revocable Living Trust Right for You?
At EP Wealth, we take a comprehensive, planning-first approach to help clients evaluate whether a trust aligns with their broader financial and estate goals.
Learn more about our estate planning services and how we support coordinated, forward-looking strategies.
DISCLOSURES
- EP Wealth Advisors, LLC. is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability.
- Request an appointment with an EP Wealth Advisor when you have a minimum of $500,000 in investable assets – which includes qualified retirement plans (IRA, Roth IRA, 401(k), taxable brokerage, cash (savings / checking) and CDs. Investable assets do not include your home, vehicles, or collectibles.
- Hiring a qualified estate planner and/or advisor does not guarantee investment success, and does not ensure that a client or prospective client will experience a higher level of performance or results. No guaranty or warranty is made that any direct or implied results or projections being represented here will be met or sustained.
- Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions. Content does not involve the rendering of personalized investment advice nor is it intended to supplement professional individualized advice.
- EP Wealth Advisors (“EPWA”) makes no representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information presented. All expressions of option are subject to change without notice.
- All investment strategies have the potential for profit or loss. Different types of investments and investment strategies involve varying degrees of risk, and there can be no assurance that any specific investment strategy will be suitable or profitable for a client’s portfolio. The risk of loss can never be eliminated even if working with a professional.
- An estate plan is a helpful tool that can assist individuals in managing and arranging affairs in the event of death or incapacity. However, the scope and extent of the plan varies depending on the unique circumstances and desires of the individual client. It is for this reason, that the analysis encompassed herein is not intended to be comprehensive in nature nor should it be interpreted as legal advice. Please consult a legal professional to determine the extent, scope, and the drafting and creation of the appropriate estate documents. EP Wealth Advisors is not in the business of providing legal advice or preparing legal documents. Our review is limited to and in association with Financial Planning only.
- Laws vary by state. The information presented herein is intended to be general in nature and may not apply to your state of domicile. Please consult local legal counsel to determine the best practices for your state.
