Articles – Page 45 – Law Offices of Elsa W. Smith, LLC

What is a revocable living trust?

A revocable living trust is an arrangement in which a Grantor (the trustmaker) places their assets and property in a trust, which can be updated and revised by the Grantor while they are alive. The trust is then managed by a Trustee, who is tasked with distributing the assets to the beneficiaries of the trust upon the Grantor’s death.

A probate court does not need to distribute assets and property in a trust, because the property and assets have been allocated to the trust. Since assets in trusts are not subject to probate, having a revocable living trust facilitates the distribution of assets by bypassing the probate process, which can be both costly and timely.

If you have considered including a revocable living trust in your estate plan, it is important to be aware of misconceptions that can affect your plan and leave you with a false impression.

Misconception #1: Assets in a revocable living trust cannot be used by the Grantor.

Assets in a revocable living trust can still be accessed by the trustmaker. The Grantor of a revocable living trust has the option to appoint themselves as the Trustee, the person designated to manage the trust. If this is the case, a Successor Trustee may be appointed to manage the trust in the event of the Grantor’s death or incapacitation.

Misconception #2: Once a revocable living trust is signed, the Grantor’s assets are automatically exempt from the probate process.

An unfunded trust is still subject to probate. A trust is considered to be unfunded if the ownership titles of the assets are still in the name of the trustmaker.

In order to “fund” a trust, the ownership titles of the trustmaker’s assets must be transferred from trustmaker to the trust. This includes vehicle titles and financial accounts. In the event of the Grantor’s death or incapacitation, the Trustee (or the Successor Trustee) can only manage the assets in a funded trust. Otherwise, the assets may still face probate.

Misconception #3: Revocable living trusts are only necessary for those with large estates or many assets.

It is commonly assumed that estate planning tools, like revocable living trusts, are less important for those with smaller estates. However, an estate does not only encompass money and real estate; Estates also include vehicles, electronic equipment, art, and other valuable possessions.

Further, a revocable living trust offers the Grantor flexibility in how their funds and property will be distributed. A Grantor with minor children may prefer to hold funds in a trust, to be dispersed to their beneficiaries in increments.

Misconception #4: Revocable living trusts are always the correct option.

Every estate plan is different. Circumstances, family needs, and assets can all have an effect on how one chooses to plan ahead. Some individuals may find a will to be a superior choice for preserving their wishes, while others may benefit much more from transferring their assets into a revocable living trust.

Information in this article is provided for educational purposes only and not intended to constitute legal advice. Please consult with a licensed attorney in your jurisdiction for help with your specific situation.

When it comes to estate planning, navigating your options can have a great payoff. Seeking the guidance of an estate planning professional can offer much-needed assurance and security.

If you would like assistance with estate planning in Maryland or have questions regarding your situation, we invite you to contact the Law Offices of Elsa W. Smith, LLC at 410-995-7719.

Articles, Business Formation

10 Tips for Small Business Owners

1. Get Serious About Digital and Physical Organization

Having a streamlined organization system can boost productivity and save you from losing access to important documents. This includes managing your physical files as well as digital data. Consider digitizing records and taking advantage of the myriad online platforms for digital case management and file storage.

2. Familiarize Yourself with Federal and State Employment Laws

For small business owners, staying organized also means being aware of and abiding by employment laws. Take the time to do research on these regulations, which differ by state and vary according to a range of factors, like the number and types of employees.

3. Know How to Choose Team Members

There comes a point where a small business owner recognizes that they could benefit from sharing their workload. Finding the right employees and business partners can help you focus your efforts where they are most needed.

When adding new members to your team, past work experience is not the only factor you should evaluate. Determine the specific set of skills you are looking for and focus on their potential within your business.

4. Outsource Specialized Tasks When Needed

Outsourcing is a viable option for small business owners who are not yet ready to add an employee to their business but would like to delegate tasks or assignments (think timekeeping, payroll, and IT) to a specialist.

5. Take (Calculated) Risks

Some of the greatest successes in history and in business can be attributed to risk-taking. Whether it is in the form of a challenge or new business strategy, taking a calculated risk can set your business apart from the rest. However, risk-taking is not equivalent to improvising; a calculated risk takes into account any possible undesired outcomes. Always have a backup plan in place.

6. Remain Optimistic

Every small business faces stumbling blocks. Setbacks can make success seem unattainable, but the way you handle a difficult situation can unlock constant growth and improvement in your business. If your business hits turbulence, try asking yourself, “What have I gained from this experience, and how will it guide my approach in the future?”

7. Learn When to Say No

In deciding when to decline a request from a potential client or customer, carefully consider your limitations. This includes any workload constraints, prior commitments, or if the request is outside of the range of your expertise.

Profitability is also a deciding factor. It may be difficult to decline work, but do not fail to recognize the financial value of the product or service you provide.

**8. Learn How to Say No**

When declining someone’s business request, provide them with a sensible explanation for why you are unable to meet the request, and make clear what you do offer. Providing this information can leave you open to future business requests from this person, who may, in turn, send other potential clients or customers your way. As a courtesy, you may assist this person by referring them to a trusted business or resource you believe will meet their specific request.

9. Network with Other Small Business Owners

Networking with other local business owners not only deepens the community bond of your business, but it can be a rich source of support and guidance. Don’t be afraid to branch out!

10. Give Yourself a Break

Operating a small business comes at the expense of extensive time and effort. However, business owners should not devalue the importance of downtime. Whether it’s a weekend getaway or a night away from your cell phone, setting aside time to decompress can benefit you and your business greatly, while providing much-needed insight.