McClellan Legal LLC Estate Planning & Tax Assessment Blog

Wednesday, August 21, 2019

Solving the Second Home Problem

During the summer, many people enjoy spending time at their vacation home. However, most people do not consider how to best protect these assets, especially if these properties are in another state. With proper estate planning, you can simplify the probate process and protect your assets for your beneficiaries.

If you own a property outside of the state in which you reside, you may want to consider having a Revocable Living Trust. A Revocable Living Trust exists during your lifetime and after your death. Unlike the Irrevocable Living Trust, you may make any changes to the Revocable Living Trust, or even get rid of it entirely. This document allows you to retitle your property to your trust to simplify the probate process, which is the process to settle your estate after you pass. This process becomes simpler because the Revocable Living Trust allows the executor to open probate just in the state where the decedent, or person who has passed, had permanent residence, rather than having the executor open probate in two or more states.

When you have a Revocable Living Trust, you will have a Pour-Over Will in place of a Will. While the executor of a Will would normally pay debtors, distribute assets to beneficiaries, and so on, the executor of a Pour-Over Will simply ensures that all the assets are moved to the Revocable Living Trusts. So, instead of the assets passing through the Will during the probate process, they will pass through the trust and not through probate. If you already have a Revocable Living Trust, be sure to retitle your property to the trust, or the property will still go through the probate process in order to pass along to the beneficiaries named in the trust.

In addition to simplifying the probate process, Revocable Living Trusts also make administering an estate more private. Wills are public records for anyone to find information about your assets and who will receive them, while Revocable Living Trusts are not accessible to the public. While you would still need to file for inheritance taxes which are public record, anything in the Revocable Living Trust itself will remain private. 

Furthermore, Revocable Living Trusts protect assets for your children. Many people earn and inherit large assets while their children are still young. Revocable Living Trusts can name a trustee for your children if they are minors or financially irresponsible. Moreover, this trust will protect these assets if your children get divorced or if they have creditors. If you are concerned about protecting your assets for your children, you will certainly want to consider a Revocable Living Trust.

Revocable Living Trusts may be preferred if you own property in another state, wish to maintain privacy, and/or want to protect your assets for your children. If you think you could benefit from a Revocable Living Trust, please do not hesitate to contact our office at 610-444-5552. We will be more than happy to schedule a free initial meeting with you to discuss your estate planning needs.

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McClellan Legal LLC is located in Kennett Square and serves clients throughout the areas of Avondale, Chadds Ford, Coatesville, Downingtown, Landenberg, Oxford, Phoenixville, Pottstown, West Chester, & West Grove.

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113 South Broad Street, Kennett Square, PA 19348
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