A revocable living trust is a popular estate planning tool that allows you to determine who will inherit your property when you pass away. It is a legal document that gives a person the authority to make decisions about the money or property of another person who is in a trust. Most living trusts are revocable, meaning you can change them as your circumstances or wishes change. 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.
A revocable living trust is active because it is created during your lifetime. Lawyers sometimes refer to it as an inter Vivos trust. It also allows for smooth transition planning if the grantor becomes incapacitated. When the grantor (trustee) of a revocable trust dies, the trust automatically becomes an irrevocable trust. A revocable trust is beneficial because it provides flexibility and income to the living grantor (also called a trustor).
It can help your estate and heirs avoid the complications and costs of probating a will. The grantor of a living revocable trust maintains control of the trust's assets and can “revoke or change” the trust at any time. For more complex situations, you may need to consult with an attorney to create a revocable living trust. After you establish the active trust or the active revocable trust, you still have to transfer the assets to the trust. In this situation, a successor trustee is also appointed who will take office after the death of the grantor to administer the revocable trust and distribute the assets. A revocable living trust is best suited for estate planning along with a will, in which the assets remain under the control of the trustor.
It avoids probate, which is the legal process of distributing assets from a will. A revocable living trust is also part of estate planning that manages the grantor's assets as they age. If you have any questions about creating a revocable living trust, it's best to consult with an attorney who specializes in estate planning.