When To Have A Revocable Living Trust

Dave tells Joy when a revocable living trust should be part of an estate plan, and when it shouldn't be.

QUESTION: Joy’s dad is 76 and was divorced from her mom 30 years ago. He was living with another woman for 10 years. This lady died recently and she had convinced him to buy a revocable living trust. It hasn’t gone through yet, but he’s transferred some assets into it. He has less than $2 million, which is what breaks open this situation for Dave.

ANSWER: He does not need a revocable living trust. Just shut it down and divest the assets out of it. If you’ve got a huge estate, like tens of millions of dollars, there is sometimes a place for some of your assets to be in some of those. But in 98% of estate planning cases, they don’t need a revocable or irrevocable living trust.

The idea is to put all your assets into trust instead of your name, so they pass outside of probate. But it doesn’t save you a dime on federal taxes. He needs to get a good estate planning attorney that will help him put together a detailed will. Then you guys need to do an inventory of what he owns and what he wants to do with it. If it’s over $2 million when he dies, there will be some estate taxes.