The first step to setting up a revocable trust is to apply for a Tax ID online. It is like getting an EIN for a new business, except you select “trust” as the entity type. Just as every corporation needs a corporation Tax ID number, a trust also needs an IRS-EIN-Tax-ID in order to be legally recognized.
It is not difficult to set up a revocable trust, but why do you need one? Revocable trusts are an important part of estate planning. They give you, the grantor, more flexibility than other types of trusts.
About Revocable Trusts
A revocable trust is also called a living trust, because you can continue to make changes to the trust as long as you are alive. By contrast, a will is a written list of instructions about what will happen to your property after you die. With a revocable trust, the beneficiaries can begin to receive their inheritance from you while you are alive. It also gives you options for appointing executors to be in charge of the trust if you suffer ill health.
With a revocable trust, everything is spelled out, but nothing is set in stone. Modifying the details of a revocable trust is much easier than with other types of trusts.
Avoid Family Drama
In movies, and sometimes in real life, applying the terms of a will can lead to lengthy legal battles. Living trusts give families privacy, because the court does not have to be involved for the beneficiaries to receive their inheritance. Legally, a will is a public document, but a living trust is not.
A revocable trust is not a substitute for a will; it is also not free of expenses. Revocable trusts are subject to the same kinds of estate taxes as other kinds of estates.