As you work on your estate plan, among the things you might consider including is a trust. There are numerous kinds of trusts. One type you may have heard of and be curious about is a revocable living trust.
What is this type of trust and what things could it help with? Today’s post will dive into this question, going into the three words of this estate planning tool, going from back to front.
Trust describes the general nature of this tool. Like other trusts, a revocable living trust involves a person transferring assets to the trust, with trust assets being managed and distributed to beneficiaries by a designated trustee. So, this puts the assets into the control of the trust. This can have benefits, such as allowing assets in the trust to avoid probate upon your death.
How a trustee is to manage and distribute assets, and who assets are to be distributed to, can be directed by the terms of a trust. So, what terms a revocable living trust contains can be of great importance.
Living describes when a revocable living trust is formed. You form this type of trust during your lifetime. This is as opposed to a trust that is created upon your death. So, revocable living trusts can be used for the management of your assets while you are still alive, a purpose wills can’t serve. You could play a very hands-on role in this management if you want, as you could assign the trustee role to yourself and serve this role during your lifetime.
The ability for assets to be managed during your lifetime also makes it so these trusts can sometimes prove helpful in planning for the possibility of becoming incapacitated in the future.
Revocable refers to how changeable this type of trust is. A person can generally revoke or change a revocable living trust they formed whenever they want. This can allow for a great deal of flexibility. It is worth noting though that a trust being revocable means there are certain goals it generally cannot help with. For one, revocable living trusts can’t be used towards the minimization or elimination of estate tax liability.
This is a broad overview of what revocable living trusts are and what they can do. A lot of specific factors can impact whether this type of trust would be right for you. When considering this type of trust, or any kind of trust, you may want to discuss your estate planning goals and whether the trust would help with these goals with a skilled estate planning attorney.