Revocable Living Trusts
A revocable living trust is exactly that: a trust you create during your lifetime that you can change or revoke any time you wish. When you die, however, your revocable trust becomes irrevocable for the obvious reason that you’re no longer alive to change or revoke it.
Like all trusts, a revocable trust has the following three required people or groups of people:
- The grantor, i.e., you, the person who establishes the trust.
- The trustee, i.e., the person or entity that manages the trust and distributes its assets or the income they produce to the beneficiary or beneficiaries.
- The beneficiary, i.e., the person or entity that receives the assets or their income at one or more times specified in the trust, including during your lifetime and after your death.
Actually, you can be your own trustee and beneficiary in addition to being its grantor. If you choose to be the trustee, you get to maintain control over the assets you place in it. It’s always a good idea, though, to name a successor trustee to take over in the event you become ill or incapacitated or when you die.
What Assets Go Into a Revocable Living Trust?
You can transfer any and all assets you own in your sole name into your trust, including the following:
- Your bank account(s)
- Your investment account(s)
- Your home
- Other real estate you own
- Your vehicle(s)
- Your tangible personal property such as jewelry, furniture, artwork, books, china, silver, even clothing
Remember, you will need to re-register ownership of anything you transfer into your trust that requires ownership papers from yourself to the trust since it will now own these assets. You will no longer own them personally. Nevertheless, for income tax and estate tax purposes, they will still be considered as yours since, as mentioned, you can revoke your trust at any time.
Revocable Living Trust Benefits & Avoiding Probate
One of the major benefits your revocable living trust provides you, whether or not you’re one of its beneficiaries, is that the assets you place in it do not become part of your probate estate when you die. Not only does this save what could be considerable probate fees, it also means that your trust assets pass to your designated beneficiaries almost immediately, without having to wait for a court to approve such distributions.
Furthermore, it removes the very real possibility that your estate might have to undergo probate in every state where you own real property if those properties aren’t in your trust. In the event that your estate does go to probate, a probate lawyer could be contacted for assistance.