Is a revocable living trust right for me? In this article, I’ll help you make that decision by answering the question “What is a revocable living trust?” and providing a list of the pros and cons of using a revocable living trust as part of your estate planning.
What is a revocable living trust?
Sometimes called a living trust or just a revocable living trust, the term revocable living trust generally refers to a trust setup during a person’s lifetime for the purpose of distributing that person’s estate at their death. When you think of a trust, you make think of the long-term dynasty trusts designed to carry wealth through multiple generations of a family that are commonly part of television and movie plots. Although that’s a common use of trust, a trust can also be a useful planning tool for more simple estate plans. The person creating the trust is referred to as the grantor or settlor of the trust. A typical scenario would be a trust that becomes irrevocable at the grantor’s death, provides for a new trustee at the grantor’s death, and instructs the trustee how to distribute the property within the trust to the trust beneficiaries. To take full advantage of the benefits of a revocable living trust, the property of the grantor should be placed in the trust at creation. Then, a pour over will is created in case any later acquired property is omitted from the trust. If there are assets outside of the trust without a defined beneficiary, the executor can probate the pour over will to move those assets into the trust to be distributed according to the terms of the trust.