I realize I need to finish up the piece on revocable trusts. Last time, I listed the reasons why a revocable trust may be a good method for owning and managing assets during your lifetime and even after your death.

I think it’s important to recognize what the limits are on revocable trusts, and the costs involved with them.

1. Revocable trusts will not save you a penny in taxes. They won’t cost you any more, but they don’t save on them. In order to recognize tax savings (such as estate tax on death) a far more cumbersome method must be employed: the creation of an irrevocable trust and a gift to that trust. That is a subject for another day.

2. Assets need to be re-titled. Big-ticket items like houses, cars, and other things that have recorded titles need to be re-titled in the name of the revocable trust, and out of the name of the person creating the trust (known in trust-speak as the “grantor”). This is a hassle, and has administrative costs usually in the hundreds, sometimes thousands of dollars. This is frequently the part of the process where everything comes to a grinding halt. The best plan in the world won’t help you if you don’t implement it.

3. Revocable trusts do not offer anything in the way of asset protection. A grantor cannot shield his assets from potential creditors by placing them in a revocable trust. The law will view the trust as completely invisible for these purposes. If you are in a profession where you view the likelihood of a lawsuit as high, a revocable trust will not offer any measure of additional protection.

So what is the bottom line? I remain a fan of revocable trusts for people who view the chances as high that they will need assistance in managing their affairs. I have arbitrarily drawn the line at age 70 as the point at which everyone should give it serious consideration. Younger persons who may have serious or chronic health issues are also likely candidates.

A revocable trust is merely a tool, a means to an end. Just like a hammer can be used to build a house or smash a car’s windshield, the real value lies in how it is employed.