Living Trust

Revocable Living Trust

Learn about the revocable living trust and how it one can be beneficial.

The revocable living trust is the primary document in your Estate Plan. It is a written, legal document that allows you, as the Trustee, unlimited access to and full control of your assets during your lifetime. It enables you to pass property to your family, friends or other loved ones after your death and it allows you to appoint someone (as Successor Trustee) to ensure that property goes to the people you’ve selected after your death.

Once you pass away, the trust becomes irrevocable (meaning that it cannot be changed).

In your revocable living trust, you still have all the incidents of ownership, both good and bad, and as trustee you have the duty and responsibility of managing those assets. The trust will not only own the assets but the terms of the trust will dictate how they can be used both during your life and after your death.

Despite the way it sounds, you do not lose control of the assets you put into the name of your revocable living trust. Technically, you no longer own anything—everything you have is in the name of the trust. But, as a result of being your trust’s trustee, you maintain complete control. You can still buy, sell, borrow or transfer. Upon the incapacitation or death of you and your spouse, the control will be transferred to the successor trustee. At that point, they will manage the assets in line with the terms you have established within the trust.

As a result, your estate will not need to go through probate because ownership has been assigned and control has been given to the successor trustee. (Note: In order for assets to avoid probate, they have to be properly titled in the trust’s name. The living trust holds title or owns your property and assets; therefore setting up a living trust eliminates the hassles of probate and allows any assets within the trust to go directly to your heirs.)

The revocable living trust can give you a great amount of flexibility. With it you can:

• Name anyone over the age of 18 to act as trustee.

• Maintain full control of the assets in your trust the same way you do now.

• Manage your taxes the same way you currently do.

• Change or modify the terms of your trust any time.

When you create your living trust document, whether as a husband or wife or as a single individual, you want the broadest powers possible. This is why most “good trusts” will be thick documents. Of course it is foolish to say that all “thick trusts” are well written documents, but if it is thin, then chances are your trust has limited provisions.

In addition to broad powers, you can establish how much control you want to give to your successor trustee. As a result, you can set up a “sprinkling provision” for minor children, which will allow assets to be held in trust for minor children and distributed at certain times (ages) and in certain percentages.

To begin the process of setting up your revocable living trust, you should contact an estate planning attorney or other estate planning professional. They will be able to give you the advice and guidance you need so that everything is done correctly.