Creating a revocable living trust (RLT) is a popular estate planning tool that allows an individual to decide who will receive their property when they pass away. The grantor of the trust can also act as the trustee while they are alive, and modify or cancel the provisions of the trust depending on their wishes. 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. Most living trusts are revocable, meaning that they can be altered as circumstances or desires change.
This type of trust is active because it is created during the grantor's lifetime, and it controls the assets while they are alive. After death, a successor trustee is appointed to administer the trust and distribute the assets to the designated beneficiaries. A revocable living trust is often used in estate planning to prevent probate courts from clashing over an estate's assets. Unlike an irrevocable trust, it does not provide tax protection or protection from creditors.
Each type of trust is best suited for different purposes, so it is important to understand which one is right for you. To establish a revocable living trust, you must complete a form appropriate to your state. The trust will not be effective unless you invest your money or assets in it. If you have a fairly simple situation and are willing to do the work, you can create your own revocable living trust.
You can also use a will in conjunction with an active trust to appoint guardians for children and express final wishes that would not otherwise be reflected in a living trust. Revocable living trusts are a popular estate planning option because they allow the grantor to make changes to the trust once established and even allow them to eliminate it entirely. This type of trust can also be used to transfer property and assets to beneficiaries without going through the probate process.