Revocable Living Trust
Revocable Living Trust - Definition
A
revocable living trust is an arrangement you make for management and distribution of your property. Like a will, the trust is revocable, meaning that you can modify it at any time.
These revocable living trusts are established by a written agreement or declaration which appoints a "trustee" to administer the property, and which gives detailed instructions on how the property is to be managed and eventually distributed.
If you want your revocable living trust to substitute for probate (court administration of property after death) or for guardianship (court administration after incapacity), you must give the trustee detailed instructions about how to handle these situations, and you can legally transfer substantially all of your property to the trustee. A revocable living trust agreement is usually more complicated than a will, and transfers of assets to the trustee can be time consuming and more expensive.
Advantages of a Revocable Living Trust
- You see your trust work.
- If you are not your own trustee, you observe the trustee in action
- You avoid probate and the trust can be used to avoid ancillary probate - that is probate of property in another state
- You avoid the attendant publicity of probate
- You will probably save your estate a substantial amount of fees and costs
- You can provide for uninterrupted management in case of incapacity
- You can avoid interruption of management at death
- It's a good way to pass property to charity and save taxes at death
- You can change your mind
Disadvantages of a Revocable Living Trust
- Initial cost of setup. Property must be transferred to the trust
- It complicates subsequent dealings with the property
- It may require payment of an annual trustee's fee if someone other than yourself is trustee
- At time of termination, there may be fees
- There are no immediate tax advantages
Revocable Living Trust
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