Revocable Living Trusts (Living Trust)
A revocable, sometimes called “living,” trust, is a type of trust that is completely revocable or amendable by its creator (usually called the “grantor” or “settlor”) during the grantor’s life. The trust becomes irrevocable upon the death of the grantor.
During the life of the grantor, the assets of the trust can be used by the grantor as he or she has always used those assets. The grantor can continue to spend any liquid assets placed in the trust and can continue to live in any residences placed in the trust. It is upon the death of the grantor that the benefits of a revocable trust are realized.
What Are The Benefits Of A Revocable Trust?
A revocable trust allows the assets in the trust to avoid the probate process and the fees, both to the court and to attorneys that go along with the probate process. It is important to note that the trust allows the grantor’s assets to avoid probate only to the extent the assets are placed in the revocable trust before the death of the grantor.
It is possible with a completely funded revocable trust — one in which all of the grantor’s (otherwise probate) assets are placed in the trust before the grantor’s death — to avoid the probate process altogether.
Revocable trusts are typically used in connection with a “pour-over” will, in which all of the decedent’s assets are directed to be distributed to the revocable trust upon the death of the trust’s grantor. The revocable trust contains the instructions for distribution of the individual’s estate plan. The diagram below shows how this process works.
Funding A Revocable Trust
An often-overlooked step in preparing a revocable trust is funding the revocable trust. Funding a revocable trust during the grantor’s life allows the assets to avoid probate and the associated fees.
In order to fund a revocable trust, bank accounts should be retitled in the name of the trustee, partnership interests, LLC interests, and corporate stock should be assigned to the revocable trust, and deeds should be prepared transferring the real property to the trust.
You may contact The Nelson Law Firm of Bluffton, LLC, for answers to your revocable living trust questions. We can provide you with full-service estate planning. For a consultation, please call us at 843-548-0157, or complete our online form.