A Revocable Living Trust is a trust designed to provide for yourself and others. You fund a trust with your assets and establish for whom the trust will provide, to what extent, and for how long. But what exactly is a revocable living trust and how do they work? To better understand a revocable living trust, let’s look at a few key concepts first.
Grantor: A grantor is the person who creates a trust, i.e., the person who owns the assets in the trust. There may be more than one grantor of a trust: a husband and wife, for example. In the trust document, the grantor instructs how the assets of the trust should be managed and distributed.
Trustee: The trustee is the person or institution who carries out the instructions in the trust document.
Trust: A trust is a legal agreement in which a grantor transfers assets to a trustee, who then manages those assets as instructed by the grantor in the governing document.
As grantor, when you create a revocable living trust, you are essentially telling your trustee to: manage certain assets per your direction; make payments to you as directed; take care of the financial needs of you and your family should you become unable to do so; and after your death, either manage the assets for your family or distribute the assets as instructed in the trust agreement.
While trusts are often considered a financial tool for the wealthy, they can be a valid option for anyone, regardless of the size of their estate. They have many benefits: for example, they provide financial management if and when it’s needed, and provisions can be added to the trust to reduce estate taxes and avoid the costs and delay of probate.
If you would like to learn more about the benefits of revocable living trusts, give us a call, we would be happy to answer your questions and help you determine if a revocable living trust is right for you.