A living revocable trust, as its name implies, is created while an individual is living. The revocation in the title refers to the control that an individual retains over the assets. He or she has complete control over the trust assets. The assets must also be used only for the individual’s benefit. For that reason, the same individual who created the living revocable trust is generally also its trustee and beneficiary.
The unique feature of a living revocable trust is that it holds assets for an individual while he or she is alive. Upon the individual’s death, the designated successor trustee signs over the legal title of the trust assets to the named successor beneficiaries. This can be done without a court order. A living revocable trust generally also provides for the management of any assets transferred to it in the event of the individual’s incapacity.
A living revocable trust can actually help individuals to save money. In addition to avoiding probate, this document can include an incapacity clause designating other individuals with the authority to make financial decisions on his or her behalf.
Our estate planning law firm recommends that an individual have an attorney review a living revocable trust for accuracy and compliance with any applicable laws. For example, we often get questions about when the trust takes effect. Like all trusts, a revocable trust must be funded in order to take effect. An individual must re-title assets as the trustee of his or her trust. Only then does a revocable trust really become a valid estate-planning tool.
Another common question is where the original should be kept. Any changes, such as a revocation or a restatement of the trust, can be more easily modified if the individual retains the original copies.
Source: FindLaw, “Living Trust Information,” copyright 2016, Thomson Reuters