UNDERSTANDING REVOCABLE TRUSTS
How a Trust Works
A revocable living trust is an agreement between the Grantor (the person who creates the trust) and the Trustee (the person who holds legal title to the trust property). The agreement provides instructions to the Trustee as to how an individual’s property will be distributed and managed during their lifetime, and distributed to the trust beneficiaries (heirs) after death. A revocable living trust allows you to give what you have to whom you want, when you want, the way you want.
In most cases, the person who forms the trust (also referred to as the Grantor), also serves as the Trustee, controlling and managing the assets he or she placed into the trust. Upon death, a trusted family member of friend (referred to as the Successor Trustee) that the Grantor has named will step in to take over control of the trust assets. This ensures that the trust assets are handled and distributed properly, according to the wishes of the Grantor.
In its simplest terms, all that the above means is that you control your own trust assets while you're alive, and you decide who will control and inherit those assets during your incapacity and after your death. The terms of your trust are decided by you, based on your family situation and goals. Rather than going through court proceedings, all of this is handled privately, efficiently, and in a more cost-effective manner.
Revocable living trusts are an excellent tool to avoid the cost and hassle of probate, because the property held in the trust during life passes directly to the trust beneficiaries after the grantor's death, without probate court proceedings. Revocable living trusts can also be utilized to minimize or eliminate estate taxes.
Who Should Have a Revocable Living Trust?
Virtually anyone with a family and any assets. Whether you are young or old, rich or poor, married or single, if you own titled assets such as a house and want your loved ones to avoid court interference at your death or incapacity, you should have a revocable living trust. A trust allows you to bring all of your assets together under one plan, according to your terms. It will protect you during incapacity, and your family or loved ones after death.