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What you need to know about living revocable trusts

A revocable trust, or living trust, can be a helpful tool for estate planning if you don't want to lock yourself into legal arrangements for life or if you're looking to protect some of your assets while you're still alive. Trusts can be tricky, though, so it helps if you know what you're dealing with before you get into the nitty gritty. Here are a few facts worth knowing if you might consider trusts in the future.

Trusts aren't a dumping ground for all the assets you want to protect or pass on to other people eventually. Some assets don't need to go into a trust to avoid probate; a life insurance policy pays on death, for example. If you want to leave life insurance benefits to a minor, on the other hand, a trust could be necessary. Being strategic with how you structure trusts and what assets you put into them helps you get the most out of this legal tool.

You can use trusts to enhance your FDIC protection. Most bank accounts are federally insured up to $250,000, but the FDIC insures trusts for up to that amount per beneficiary. That means if a trust has four beneficiaries, it's federally insured for up to $1,000,000.

Trusts let you retain some of the privacy that isn't possible public probate proceedings, but they aren't necessarily 100 percent confidential. Primary beneficiaries are usually entitled to a copy of the trust when the grantor dies, and secondary beneficiaries may be entitled to their own copy in some states. Living trusts are still more private than some other estate vehicles, but it's a good idea to work with an estate law professional to understand whether a trust is going to meet all your needs.

Source: Bankrate, "6 surprising facts about a living revocable trust," accessed Jan. 27, 2017

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