A revocable living trust is a legal document that gives an individual the power to make decisions regarding the money or property of another person who is in the trust. This type of trust is revocable, meaning that the provisions can be modified or revoked depending on the wishes of the grantor, or the originator of the trust. During the life of the trust, any income generated is distributed to the grantor, and only after death are the assets transferred to the beneficiaries of the trust. In a revocable living trust, the grantor still owns their assets and is responsible for reporting the appropriate taxes on their personal return. Creating a revocable living trust can be an effective way to manage an estate and ensure that assets are distributed according to one's wishes.
This type of trust allows for greater control and flexibility in distributing assets, as well as greater privacy compared to wills. It also offers a way to avoid probate costs and delays. However, setting up a revocable living trust requires professional legal help, which can be costly. A revocable living trust is different from a testamentary trust that is part of a last will and testament, as it takes effect while the testator (the drafter of the will) is still alive. This type of trust allows for changes (or amendments) to be made to the trust document while the grantor is alive, at their own discretion.
Because the grantor maintains control of a revocable living trust and can change or cancel it at any time, all assets in the trust are still considered to be owned by them. People often refer to revocable living trusts or revocable trusts simply as “living trusts”. This type of trust covers a person's assets while they are alive, when they are incapacitated, and when they have passed away. It can also help an estate and heirs avoid the complications and costs associated with probating a will. However, there are some drawbacks to establishing a revocable living trust. If the grantor has health problems during their aging process, a revocable trust allows for a trustee chosen by them to take control of their capital.
Additionally, setting up a trust requires professional legal help, which can be costly, but prices may vary depending on location. In conclusion, creating a revocable living trust can make disposing of an estate easier and faster. It offers many advantages over wills in terms of privacy, control, flexibility, and avoiding probate costs and delays. However, it is important to consider all aspects before deciding if this type of trust is right for you.
