A revocable trust is a type of legal arrangement that allows the person creating the trust (the “grantor” or “settlor”) to retain control over their assets and modify or dissolve the trust at any time during their lifetime. This type of trust is often used as a tool for estate planning, as it allows the grantor to specify how they want their assets to be managed and distributed after they pass away.
Creating a Revocable Trust
To create a revocable trust, you’ll need to take the following steps:
- Choose a trustee: The trustee is the person or entity responsible for managing the assets in the trust and carrying out the terms of the trust. When setting up a revocable trust, it’s important to choose a trustworthy and capable trustee. This could be a family member, a friend or a professional such as a bank or trust company.
- Fund the trust: Once the trust has been created, the next step is to transfer ownership of your assets into the trust. This process, known as “funding the trust,” is important for ensuring that your assets will be managed according to the terms of the trust. To fund the trust, you’ll need to transfer ownership of your assets by changing the titles or deeds to reflect the trust as the owner.
- Create a trust agreement: A trust agreement is a legal document that outlines the terms of the trust, including the purpose of the trust, the duties of the trustee and the rights of the beneficiaries. It’s important to have a clear and detailed trust agreement in place to avoid any confusion or disputes down the line.
Managing a Revocable Trust
As the grantor of the trust, you have the right to manage the assets in the trust as you see fit. This includes making investment decisions, buying and selling assets, and distributing assets to the beneficiaries of the trust. However, it’s important to remember that the assets in the trust are not personally owned by you — they are owned by the trust.
Making Changes to a Revocable Trust
One of the benefits of a revocable trust is that you can make changes to it at any time during your lifetime. This can be useful if your personal or financial circumstances change. For example, if you have a child or get divorced, you may need to modify the trust to reflect these changes. To make changes to the trust, you’ll need to execute a document called a “trust amendment.” This document should be drafted with the assistance of an attorney to ensure that it is legally binding and properly reflects your intentions.
Dissolving a Revocable Trust
If you decide that you no longer want to have a revocable trust, you can dissolve it at any time. To do this, you’ll need to execute a document called a “trust termination.” This will transfer ownership of the trust assets back to you (assuming you’re the grantor), and the trust will no longer be in effect.
A revocable trust is a useful tool for estate planning that allows you to retain control over your assets and make changes to the trust at any time during your lifetime. However, it’s important to choose a trustworthy and capable trustee, fund the trust, manage the assets in the trust, and stay up to date on any changes you may need to make to the trust. If you decide that you no longer want a revocable trust, you can dissolve it at any time. It’s a good idea to consult with an attorney when setting up or making changes to a revocable trust to ensure that it is properly drafted and meets your needs.
This article was published by a third party and is intended for general informational purposes only and does not necessarily represent the views of Legacy Assurance. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal or financial advice. You should consult with an attorney regarding any questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about how to set up a trust and other estate planning matters, visit our website at legacyassuranceplan.com.