Revocable Living Trusts
A revocable living trust is a legal document that is created by an individual for the purpose of managing his or her assets and property during his or her lifetime and beyond. Upon the death of the trust's creator(s), the assets and property will be transferred to the designated beneficiaries.
How a revocable living trust works
While the creator of the revocable living trust is still living, the revocable living trust acts as just another part of individual creator; that is, the trust is not considered a separate legal entity. The trust creator can freely add and remove assets and property from the revocable living trust. After the creator of the revocable living trust passes away, the trust becomes irrevocable and the trust survives the creator and becomes a separate legal entity. The trust assets and property are distributed according the trust's terms to the designated beneficiaries.
Advantages of a revocable living trust
A revocable living trust provides many advantages to the creator both during life and after. Here are some of the advantages of a revocable living trust:
- May allow for easier access to assets and property during incapacity or disability
- Helps avoid expensive and costly probate proceedings
- Prevents will contests and probate litigation
- Allows for the attachment of restrictions and conditions on property left to beneficiaries
- May protect assets after death from creditors
What a revocable living trust does not do
Unfortunately, there is a lot of misinformation about the benefits that a revocable living trust does and does not do. A revocable living trust does not:
- Provide explicit tax benefits
- Protect you from creditors during your lifetime
- Mean that you do not need a will