Trusts come in numerous varieties, and there are many different reasons for establishing a trust. For example, an estate planning client may recognize the need for competent management of their assets, either during their lifetimes or following death; they may desire the important income or estate tax savings a trust can provide; or they may simply desire to control the ultimate disposition of their property outside of the probate process. A properly drafted and managed trust can accomplish many, if not all, of these objectives.
Trusts
frequently used in planning an estate include: revocable trusts, living trusts, insurance trusts, testamentary trusts, and irrevocable trusts. These different types are often combined or their uses expanded.
The Revocable Living Trust Agreement
The revocable living trust is first, an
inter vivos trust, meaning it is a trust that an individual creates during his or her lifetime. The term
revocable means that the creator of the living trust reserves to himself or herself the right to amend or revoke the living trust. At the time of death, the revocable living trust becomes irrevocable and a successor trustee follow specific trust instructions.
The revocable living trust can control all of your assets both during your life and after your death. The following is a basic summary of how the revocable trust works: When you set-up your Revocable Living Trust (RLT), you transfer title of most of your major assets (stocks, bonds, real estate, etc.) from your name to the name of the trust. For most assets, the transfer of ownership is a rather simple process. You then name yourself as the trustee and beneficiary of the trust. This gives you, and you alone, total and complete control and management of all your assets. You can buy, sell, trade, do whatever you want -- just like you do now, except under the name of your revocable trust.
Here’s the difference from a basic will or simple will, and the real benefit of a revocable living trust. When you die, there will be no assets left in your name, and, therefore, no probate for your family to endure. Whomever you name as your successor trustee (generally your spouse) will immediately gain control of your assets to distribute them according to your exact instructions.
A revocable living trust is often the centerpiece of most estate plans. If you have young children, the revocable living trust in an excellent vehicle to transfer your wealth according to a specified set of instructions.
Living trust Not A Complete Will Substitute
However, a revocable living trust is not always a complete will substitute. There most always exists a need for a will, however simple. Invariably, the revocable living trust will not be completely funded and there will be some assets that will require probate. Although this is often the case, it is still a fact that the fewer the assets in probate, the easier administration of the estate and the less complication for your family.
If property is accidentally left out of the trust, a pour-over will is desirable to add this property to the trust so that all will be a part of the master estate plan. Thus, the revocable living trust, in addition to the pour-over will, is generally the vehicle of choice for the well designed estate plan.