Because most people do not know all the ins and outs of revocable trusts, there are a number of different myths surrounding them. Some of these myths are simply misinformation, while others are wildly untrue. If you’re thinking of creating a revocable trust, it is important to speak with an attorney who specializes in revocable trusts first, so that you understand exactly what the trust will do.
Myth #1: Having a revocable trust guarantees you will avoid probate court. This is not always true. The grantor must make certain all life insurance policies are updated and that all accounts are titled correctly. If any property is unfunded, it will go to probate court. Some states actually require probate to cut off creditors’ rights, provide estate tax breaks, and more. However, this type of probate is less costly and is much easier to deal with.
Myth #2: Many people believe that creating a living trust is a complicated procedure and that it’s too complex for them. This isn’t true at all. A living trust is actually very easy to create, and it offers several benefits and protections that a will simply does not.
Myth #3: Another common myth is that revocable trusts are only needed by those who are very wealthy or have a lot of property. This isn’t true, either. In fact, your overall net worth is only one factor to consider when deciding if you need a living trust.
Myth #4: Revocable trusts protect your assets and property from lawsuits. They do not. The reason for this is that with a revocable trust, you can change the terms of the trust whenever you want, meaning you can add or remove assets at any time. You still personally own all assets listed in the trust, so you can be sued for them.