A revocable living trust is a type of ‘inter vivos’ trust (a trust made between living people) used for estate planning purposes. Under a revocable living trust agreement, you as the creator of the revocable living trust, declare yourself trustee of the trust and then transfer some or all of your personal property to the trust. The legal ownership of the property passes from you personally to the trust. However, as trustee of the trust you maintain control over and use of the trust property.
As creator of the revocable living trust, you can, at any time, either revoke the living trust or call for the return of some or all of the property transferred to it. You can also add assets to the trust, change the terms of the trust and even make it irrevocable (incapable of change) at any time in the future.
After your death, the assets in the revocable living trust will pass to the beneficiaries that you have named in the living trust agreement in much the same way that they would under a last will and testament. Specifically, your revocable living trust agreement will nominate a person known as the “successor trustee” (which is a little like an executor or personal representative) who will have the responsibility of transferring ownership of the assets in the trust to the beneficiaries named in the trust document following your death. In most cases, the whole transfer process takes only a few weeks.
From an estate planning perspective, one of the most important features to note is that since the assets in the revocable living trust are legally owned by the trust, they will not form part of your probate estate at the time of your death. As such, there will be no need for any of these assets to go through the probate process; nor are any of those assets available to settle debts from your estate (other than taxes which might be due). This, in turn, allows for the speedy distribution of those assets to the beneficiaries named in the living trust agreement. Once all of the assets are transferred to the beneficiaries, the living trust ceases to exist.
Revocable living trusts are very easy to establish and manage and, apart from avoiding probate, there are many advantages to using living trusts as part of your overall estate plan. These reasons relate to the management of your assets during incapacity, privacy, tax and more.
How Can EstateBee Help You?
For more information on revocable living trusts, check out some of the other articles on our website and our discussion forum.
Alternatively, if you would like some more in-depth information on living trusts, check out our Living Trust Kit and our book Make Your Own Living Trust and Avoid Probate. Each will guide you step-by-step through the matters you need to consider when making a revocable living trust. With detailed information, easy-to-follow instructions, helpful worksheets and all of the forms necessary, you will also be able to prepare a revocable living trust.
If you prefer to create your revocable living trust online, check out our online living trust software. It will guide you step-by-step through the entire process. Detailed information and explanations are contained at every step of the process.
If you have any questions regarding living trusts, feel free to contact our customer service team who would be happy to answer any questions you may have.
Adrienne is an author and estate planning expert.