A revocable living trust is a legal arrangement that allows an individual (the grantor or settlor) to place their assets into a trust during their lifetime. The trust is "revocable" because the grantor retains the right to make changes, amend, or revoke the trust at any time during their lifetime, as long as they are mentally competent.
Here are some key elements of a revocable living trust:
This is the person who creates the trust and transfers their assets into it.
The grantor typically serves as the initial trustee, maintaining control over the assets. However, a successor trustee is named to take over in the event of the grantor's incapacity or death.
These are the individuals or entities who will receive the trust assets upon the grantor's death or according to the terms specified in the trust document.
The grantor transfers ownership of their assets into the trust, which may include real estate, bank accounts, investments, and personal property. Other assets, such as retirement accounts, investment accounts, etc…are not transferred into the trust, but will be amended to name the trust as the beneficiary.
As the name suggests, the grantor can change, amend, or revoke the trust at any time during their lifetime. This flexibility is a key feature of revocable living trusts.
One of the primary advantages of a revocable living trust is that it can help avoid probate, the legal process of validating a will and distributing assets. Assets held in the trust are generally distributed according to the trust terms without going through probate.
Unlike a will, which becomes a public record when probated, the terms of a revocable living trust typically remain private.
The trust provides for the seamless transition of management and control of assets in the event the grantor becomes incapacitated, as the successor trustee can take over without the need for court intervention.
It's important to note that while a revocable living trust offers flexibility and certain advantages, it may not be necessary or suitable for everyone. The decision to establish a trust should be based on individual circumstances, estate planning goals, and trusted legal advice.
Not sure where to start? Click here to schedule a free 15-min phone call and we will gladly answer your questions and address any concerns you may have about the process of estate planning.