A Living (Revocable) Trust plays many roles in each of our lives.
1st - Avoid Probate
A Living Trust avoids probate which as previously discussed, is an expensive, public, and unnecessary process upon the passing of a person,if propely planned for there is no need for a court to determine who your heirs are.
2nd - Minimize Estate and Inheritance Tax
It may minimize the amount of Estate and Inheritance Tax due against your estate upon your passing. This means that your heirs will pay the least amount of taxes and receive the most amount of money. In fact, a married couple can double the amount they can give to their heirs with a properly executed Living Trust. The applicable Estate and Inherintance Tax rate will increase to 50% in the year 2011, currently it is 45%. If you don't take advantage of this opportunity you can loose up to $500,000 in taxes.
3rd - Appoint Guardians
It can appoint a guardian for your minor or special needs child(ren) if you were to become deceased or incapacitated. If you were to become incapacitated or deceased, you would want to know that your children will be cared for by a person of your choosing and not someone appointed by the court. This is especially important when your child(ren) have lost their parents. You want the peace of mind to know that the person caring for them will love them as you do.
4th - Special Needs
For a disabled child(ren), a special needs trust or provision may be created to provide for them throughout their lifetime. This will ensure the child(ren) will not deplete their assets during their lifetime. Additionally, it will ensure that the assets they have will last as long as possible in the hands of a capable fiduciary of your choosing.
Peace of Mind
Ultimately, the Living Trust provides the Creators peace of mind in knowing that the assets they worked so hard to build will not be wasted in probate. They will also know that the people who are most precious to them will be taken care of. You dictate all the terms to make sure they are responsible when/if they take control.
The Living Trust is multi-faceted and can serve many purposes. It is important that you consult a knowledgable attorney to ensure your Trust is being maximized for your benefit.