What is a Revocable Living Trust?
The term “living trust” is generally used to describe a trust (a) which you can create during your lifetime, and (b) which you can revoke or amend whenever you wish to do so. You can also create an “irrevocable” living trust, but that is permanent and unchangeable and is almost exclusively done to produce certain tax results beyond the scope of this summary.
A revocable trust, also known as a “living trust,” is a fiduciary relationship between a “grantor” who is the creator of the trust, and a “trustee” who is the person willing to manage the grantor’s property. The primary purpose of creating a revocable living trust is to (1) streamline the probate process or, in some instances, eliminate the probate process; and (2) facilitate the management of assets in the event of incapacity.
In a Revocable Living Trust, you act as your own trustee. Therefore, you do not give up any control of the assets in the trust while living and competent. Since you continue to use your social security number on all your accounts as a tax ID number, there is no additional bookkeeping required. However, a Revocable Living Trust may be advantageous for your loved ones should anything happen to you.
A revocable living trust can hold title to property for the benefit of an individual. Since title is held in the name of the trustee (usually the person who set up the trust) and a beneficiary is named for the property, the property is not part of the estate for probate purposes. Similar to a will, a trust document directs the trustee how to distribute the trust property at the time of death and to whom.
