Revocable living trusts refer to one of the many tools that can make up your estate planning. With this type of trust, you are one step closer to ensuring the person who receives your property upon your death is the one you wish to.
Before delving into the details of a revocable living trust, examine the components of its name. These trusts are revocable due to the fact that you are free to change the trust. This is useful for those who change their minds or find themselves with different circumstances. The living portion of the trust refers to the fact that you create the trust while you are still alive, something lawyers also refer to as “inter vivos.”
Note, an RLT is not the same as an asset protection trust.
Your revocable living trust is a legal document. As such, it must be written out. You must sign the trust document, as must a public notary. At the minimum, the document should outline the property that it includes. It must also appoint a trustee as well as include the name of the beneficiary who will receive the property at the time of the death of the outlined trust maker.
The term trustee mentioned above refers to whoever will care for the property. During the time that the maker of the trust remains alive, they typically serve as the trustee. Upon their death, the trustee outlined in the document becomes the successor trustee.
Once you have finalized the living trust document, you as a trust maker will need to transfer the relevant property into it. In many simple cases, this can be as simple as listing the property within the document.
If you leave real estate or other titled property in the living trust, then you must retitle it with the trust’s name. The process is relatively straightforward once you know what you are doing. You must, however, take care. Mistakes can lead to your titled property ending in probate. As such, it is best to consult an expert for this portion of the process.
Probate refers to when the court supervises the process of finalizing someone’s estate. This process tends to be very time-consuming. It is also expensive and typically a burden instead of a help. By setting up a living trust, you can avoid probate for your heirs. That is because the living trust allows property to go directly to your beneficiaries, without any need of passing probate.
There are some key similarities and differences between a will and a revocable living trust. Each has a role in estate planning.
Both documents let you select beneficiaries for your property. Both additionally allow for leaving property to those of all ages, even young children. They also both allow revision to the documents in the future.
There are some things you can do with a living trust but not with a will. These include avoiding probate, avoiding conservatorships, keeping the document private following your death, and reducing the possibility of an estate-related court dispute.
Additionally, wills provide some abilities that living trusts do not. These include the ability to select an executor, select a guardian for children, select a manager for the property of the children, and provide instructions on payments of taxes or debts.
Legally, there is no requirement for a lawyer with the creation of a revocable living trust. In the case of those with straightforward situations, it is possible to create the trust document yourself. You will just need to be ready to put in some work. It tends to be simpler, however, to work with a lawyer. It is also suggested you hire a lawyer to assist with crafting your trust in more complex situations.