A revocable trust is not permanent. The grantor (who owns the trust) can change or reverse it at any time.
This has several advantages and a few disadvantages.
What are the advantages of a revocable trust?
The biggest advantage is that your loved ones can avoid the probate process after your death. If you transfer all of your assets into the trust while you are still alive, no one will have to go to probate court to attest or vie over who gets which assets.
In probate court, there is no privacy since all proceedings are a matter of public record. Few families want to experience the heartache and hassle of seeing their loved one’s assets and financial accomplishments bargained away in open court. Establishing a revocable trust makes these determinations much more discreet and efficient.
Another advantage is that if money becomes tight or something changes with your financial planning, you can revoke the trust and liquidate the assets for other purposes.
What are the disadvantages of a revocable trust?
You still have to pay federal estate taxes and state inheritance tax. Further, you are not able to set up asset protection. A last word of caution: the Pennsylvania Attorney General reports that some revocable trusts are used as scams. You may receive mail or phone calls inviting you to a seminar or referring to a “kit” that you need to buy. Do not fall for this. Verify with a bona fide estate planner before you sign your name to anything.