Revocable Living Trust

The revocable living trust is a unique and relatively new technique.  It allows you to own property during life and transfer it to your intended beneficiaries at the time of death. Essentially, it is an estate planning tool.  However, it’s also a very effective lifetime financial planning tool.

The trust itself trust is the actual owner of all the property. There is always a Grantor  who created the trust.  In addition, the Grantor transfers property to the trust.  There is always a person or institution who manages and invests the trust properties. This person is the Trustee. Likewise, there are always one or more beneficiaries that receive income, principal, or other benefits from the trust. Finally, there is always a written document defining the rights and responsibilities of the Grantor, the trustee, and the beneficiaries.

In most cases, the Grantor is also the trustee and the sole beneficiary while living.  As the name implies, the Grantor can change, modify or cancel the revocable revocable trust.  Furthermore, the Grantor can do this at any time during his/her lifetime.  Similar to a will, the document is irrevocable and unchangeable when the Grantor dies.

Expressed more simply, the revocable living trust is created and funded during your life— subject to change modification, or cancellation during your life for the primary purpose of directing the disposition of property at your death.

If your primary objective is avoiding the costs and delays inherent with a will, you can transfer most, if not all, of your assets to the trust.  When you pass, assets are used or disposed of exactly as you directed in the trust.  Moreover, court supervision and/or approval isn’t needed. As a result, your beneficiaries aren’t subject to the costs and delays normally involved in settling an estate.

In addition to transferring property to the, you can also transfer financial assets (bank or securities accounts, stocks, bonds etc.), proceeds of your life insurance policies and/or your retirement death benefits to the trust upon your death. (The trustee receives these proceeds and manages/disposes of them as directed in the trust agreement.)

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Revocable living trust