As its name implies, a revocable living trust is one that you establish during your lifetime that you can later amend or even revoke should your estate planning needs or desires change. You can establish as many revocable living trusts as you desire as long as you have sufficient assets with which to fund them.
Every trust has the following three parties:
- The grantor or trustor, i.e., you, who establishes the trust
- The trustee who manages the trust assets
- The beneficiary or beneficiaries for whose benefit you establish the trust
While you are always the grantor of the trusts you create, you can also designate yourself as the trustee and one of the beneficiaries if you so choose. In other words, your revocable living trust allows you to not only continue managing the trust assets as trustee, but also allows you to benefit from the income the trust assets earn.
If you designate yourself as trustee, however, be sure to also designate a successor trustee to automatically take over your duties in the event you become ill or incapacitated and when you die. You can choose another person or an entity such as a bank or investment brokerage to act as your successor trustee when the time comes.
Revocable Living Trust Advantages
In addition to being able to revoke or modify the terms of your revocable living trust, it also provides you with the following additional advantages:
- Assets you place in the trust avoid probate at your death.
- No one, such as a disgruntled heir, can challenge the trust or its provisions after your death.
- Your trust assets, including their value, remain a private matter, not open to public scrutiny like your probate assets.
- Your trust assets are continually managed by a competent trustee, be that you or your designated trustee during your lifetime or your successor trustee at your death.
- Your trust can help segregate your separate property, i.e., the property you owned prior to your marriage, from the marital property you and your spouse accumulate during your marriage; this can be especially important if you live in a community property state like Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin.
Keep in mind that the trust itself owns any assets you place in it. You no longer own them personally. As already mentioned, however, this does not mean that you cannot benefit from them or that you lose control over them. An experienced estate lawyer such as one from Klenk Law can draft appropriate trusts for you.