Revocable Living Trust

What is a Revocable Living Trust? 

A Revocable Living Trust (Trust) is a legal document or “Living Entity” that allows an individual or couple to transfer ownership of real property and/or assets (such as a home, real estate, bank accounts, certificates of deposit, securities, life insurance, stocks, bonds, etc.) from personal ownership into the legal ownership of the trust. A Revocable Living Trust is just what the name implies, a document that is created during an individual or a couple’s life, but that can be changed or terminated at any time. A Trust allows you to decide who will receive your assets, how much they will receive, and when they receive it. A Trust allows you to choose your successor trustees, who your beneficiaries are and appoint guardians for any minor children.

If a Trust is set up correctly (and all of the property and assets are properly transferred to the trust while you’re alive), it will provide the following benefits: Avoid probate entirely; distribute property and assets to the beneficiaries almost immediately; ensure any minor or disabled children are cared for; handle financial affairs if someone becomes incompetent; and save money in federal estate tax and capital gains taxes.

Unfortunately, about half of all people who have living trusts never complete the funding process, which practically negates the advantages of setting up a trust. “Funding” is another way of saying “Transferring” assets to the Trust. This is discussed in more detail on the “Funding a Trust” page.

Who will be in charge of distributing my assets in a Trust?

The successor trustee handles the business affairs and distribution of the estate after your death. The successor trustee could be one or more person(s) or entities, such as a bank or trust company. The successor trustee is usually a trusted friend or family member. A successor trustee locates the Trust after your death; files an inventory and appraisal of the property; pays any creditors, taxes, and fees; distributes the assets to the beneficiaries. Before selecting a successor trustee, the responsibilities need to be discussed with the individual or couple to see if they are willing and able to perform these duties. It is also a good idea to name an alternate successor trustee if, for any reason, the first choice cannot serve. 

Can I control where my assets go in a Trust?

One huge advantage of a Trust is the control that you have on when, where and how the assets are to be distributed. For example: If Bill and Sue Jones do not want their beneficiaries receiving an outright distribution of the assets until they reached the age of 25, this could be stipulated in a Trust. This does not mean that the beneficiaries cannot use the money until they are 25, it simply means that the successor trustee will be managing those assets until the beneficiaries reach the age of 25. Prior to reaching the age of 25, the assets may be used for health, education, maintenance and support.

In a Trust, the beneficiaries are the people and/or organizations to which the assets are left. Most people have a pretty good idea of who their direct beneficiaries will be. Beneficiaries may be children, grandchildren, other family members, friends, charities, organizations, etc. Couples in second, or subsequent marriages may face more complicated decisions if there are children from a prior marriage.

Who will care for my Minor Children?

An actual Trust does not provide for setting-up guardianship for minor children. However, we know this is a major step in setting-up a thorough estate plan and have included the proper documents you will need in the Trust Package we offer.

In our “Pour-Over” Will that we include in our Trust Package, you can select guardians for minor children. However, the individual or couple that you select cannot serve as legal guardian or conservator until approved by the court. (Any type of guardianship must be approved by the court.) Parents with children under the age of eighteen (18) have two estate planning concerns. The first is providing for the custody of their children should both of them die at the same time. The second concern is nominating a conservator (money manager) to supervise and manage any assets the child would inherit. The same person may fulfill both roles, or one individual may be named as the children’s guardian and another as the money manager. It is always a good idea to name alternate guardians and conservators for minor children in case the first choice is unable to serve.

Providing care and support for children with a disability is also very important. Parents must choose a personal guardian to be responsible for the disabled child. Additionally, the parents must choose a financial manager to supervise any money or property they leave for the care of the disabled child for as long as the child lives.