WHAT IS A REVOCABLE LIVING TRUST?-A revocable living trust is a popular estate planning tool that you can use to determine who will get your property when you die. Most living trusts are “revocable” because you can change them as your circumstances or wishes change. Revocable living trusts are “living” because you make them during your lifetime. Lawyers sometimes call this “inter vivos.”
Revocable Living Trusts Avoid Probate
Most people use living trusts to avoid probate. Probate is the court-supervised process of wrapping up a person’s estate. Probate can be expensive, time consuming, and is often more of a burden than a help. Property left through a living trust can pass to beneficiaries without probate.
The Trust Document
A living trust document is a written document, signed by the trust maker and a notary public. The document must list the property in the trust, name a trustee, and name who gets the property when the trust maker dies.
The trustee is the person who will take care of the property. While the trust maker is alive, the trustee is usually the trust maker and then a successor trustee takes over after the trust maker’s death.
Transferring Property Into the Trust
After the trust document is made, the trust maker must transfer any property he or she wants covered by the trust into the trust. For many items, this requires simply including a list of property with the trust document. However, titled property (like real estate) must be retitled in the name of the trust. This is usually not complicated or difficult, but it must be done correctly or the titled property could end up in probate.
Revocable Living Trusts v. Wills
With both wills and revocable living trusts you can:
name beneficiaries for property
leave property to young children, and
revise your document as your circumstances or wishes change.
With a trust, not a will, you can:
reduce the chance of a court dispute over your estate
avoid a conservatorship, and
keep your document private after death.
With a will, not a trust, you can:
name guardians for children
name managers for children’s property
name an executor, and
instruct how debts or taxes should be paid.