Understanding Revocable Trusts
Your Guide to Living Trusts and Estate Planning
? What is a Revocable Trust?
A Revocable Trust (also called a "Living Trust") is a flexible estate planning tool you create during your lifetime that can be changed or canceled at any time.
Key Features: You serve as the creator (grantor), manager (trustee), and beneficiary all at once. When you pass away, the trust acts like a substitute will, directing how your assets should be distributed.
Important: You still need a traditional will to "catch" any assets you forgot to put in the trust and to name guardians for minor children.
📋 How to Create a Revocable Trust
Draft the Agreement
Work with an attorney to create the trust document that outlines all terms and conditions.
Sign the Document
Execute the trust agreement with proper legal formalities.
Fund the Trust
Transfer ownership of your assets (bank accounts, real estate, investments) into the trust's name.
Maintain the Trust
Continue acquiring new assets in the trust's name and keep everything properly titled.
⚖️ Advantages vs. Limitations
✅ What Revocable Trusts CAN Do
Manage Disability
If you become incapacitated, your successor trustee can immediately step in to manage your assets and pay your expenses.
Streamline Asset Management
Your trustees get instant access to trust assets after your death, making distribution faster and easier.
Avoid Probate Court
Assets in the trust skip the probate process, potentially saving time and money (benefits vary by state).
Maintain Privacy
Unlike wills, trust terms typically don't become public record, keeping your affairs private.
❌ What Revocable Trusts CANNOT Do
No Tax Savings
Trust assets are still considered yours for tax purposes - no estate tax benefits.
No Asset Protection
Since you can revoke the trust, creditors can still reach trust assets to satisfy your debts.
💡 Key Takeaway
A Revocable Trust offers many advantages for estate planning, but it's not right for everyone. The benefits depend on your specific circumstances, state laws, and estate planning goals. Consult with an experienced estate planning attorney to determine if a Revocable Trust fits your unique situation.