A will only takes effect after your death, while a revocable living trust can manage your assets over your lifetime if you become incapacitated or unable to manage them yourself. This way, a revocable living trust can provide greater protection and peace of mind for you and your loved ones. The person who creates the trust is known as the trustor, grantor, or settlor - they are all the same individual. The trustee of a revocable living trust is usually the trustor themselves.
This person is responsible for managing the trust, such as keeping track of income and tax returns. It is important to name a successor trustee in case you are no longer able to manage the trust. This individual will take over the management of the trust. Beneficiaries are the people, organizations, or other entities that will receive assets from your trust after your death. A revocable trust is one in which provisions can be modified or canceled depending on the wishes of the grantor.
During the life of the trust, the income obtained is distributed to the grantor, and only after death are the assets transferred to the beneficiaries of the trust. Certain types of assets can still prevent probate legalization, such as retirement plans, insurance policies, annuities, and jointly-owned assets, meaning that a revocable living trust may not always be necessary. Unlike an irrevocable trust, a revocable living trust does not provide tax protection or protection to creditors. The assets of a living revocable trust are not protected by current or future creditors in the event of death (but the assets of a living irrevocable trust may be protected by creditors). However, revocable trusts generally don't have to go through a probate process, so they are kept away from prying eyes. When the grantor (trustor) of a revocable trust dies, the trust automatically becomes an irrevocable trust.
An irrevocable trust cannot be changed or altered once established, and the trust itself becomes a legal entity that owns the assets it contains. People often refer to revocable living trusts or revocable trusts simply as “living trusts”.A revocable active trust or an active trust also allows for smooth transition planning if the grantor becomes incapacitated. Revocable trusts don't offer the same type of protection as irrevocable trusts against creditors. However, they are better for estate planning along with a will, in which the assets remain under the control of the trustor.
A revocable living trust can help your estate and heirs avoid the complications and costs of probate. The Internal Revenue Service considers that the assets of revocable living trusts are still part of the grantor's estate, which is why revocable living trusts do not offer much of a reduction in income or wealth taxes. In conclusion, it is important to understand that a revocable living trust is an estate planning tool that allows you to manage your assets during your lifetime and transfer them to beneficiaries after your death without going through probate court. It is important to name a successor trustee in case you become incapacitated or unable to manage your assets yourself. Additionally, it is important to note that while revocable trusts do not offer tax protection or protection from creditors like irrevocable trusts do, they are still beneficial for estate planning purposes.