Revocable Living Trust

What is a Revocable Living Trust? 

A revocable living trust (also known as a “revocable trust” or “living trust”) is a document that oversees who controls your property and assets while you are living and what happens to your assets after you pass away. In your living trust, you have three key players:   

• Trustmaker (also known as a “grantor” or “settlor”) is the person who creates the trust. It can be you, or if you are married, you and your spouse can be the Trustmakers. 
• Trustee is the person who will accept your assets and will manage it under the direction of what your trust states. You can be a grantor and trustee at the same time.  
• Beneficiary is a person or institution, such as a charity, that will receive your assets. 

A revocable living trust is a highly effective estate planning tool that can help you: 

• Avoid probate court 
• Distribute your property to your beneficiaries privately and efficiently 
• Protect you and your property if you become incapacitated 
• Name trustess for minor children  

What does the term “Revocable Living Trust” mean?

In the words revocable living trust, the term “living” means that you are creating the trust during your lifetime. The term “revocable” means that you can change or revoke your trust so long as you are of sound mind. 

What does a Trustee do? 

Trustees are responsible for managing property, by following the instructions written in your trust document. Trustees must be responsible and should have knowledge about how to properly invest and manage money. Trustees will also distribute your property to beneficiaries and make sure beneficiaries are paid out according to the instructions of your trust. They will also oversee filing any state and federal tax returns. 

Who do I name as Trustee? 

A trustee can be one or more individuals, like a trusted family member or friend, or institutions, such as a trust company or bank. Individuals serving as trustee must be over the age of 18 and of sound mind. In a revocable living trust, you can name yourself as the trustee. That means you will control and manage your property in your trust just as you did when the property was in your own name. If you become incapacitated or pass away, your named successor or backup trustee will step in to take your place. 

Who can be a Beneficiary? 

A beneficiary can be one or more individuals, like a family member or friend, or institutions, such as a charity or church. In a revocable living trust, your first beneficiary is typically yourself, and if you are married, your spouse. As a beneficiary, you can use your own assets that you’ve put into your trust. In additional to naming yourselves as beneficiaries, you can name other individuals, like family members and friends, and you can name institutions, such as charities and churches. Parents creating a revocable living trust often name their children as secondary beneficiaries. 

Will a Revocable Living Trust own my property? 

Yes, a revocable living trust must own your assets for it to be effective. After a Trust is written and signed, the next step is to “fund” the trust. By funding a trust, we are moving assets into your trust. Some examples of assets that are put into a revocable trust are: 

• Bank accounts (savings and checking) 
• Home 
• Vacation property 
• Hunting land 
• Cabin 
• Taxable investment accounts 
• Brokerage accounts 
• Stocks 
• Business interests 

In the example of a home, you will transfer the title of your home to your trust, and your trust will become the legal owner of your property. Unfortunately, there are many cases where people create a trust and fail to put their property in the trust. An empty trust cannot act on your property, and instead, your estate may be forced into probate court.