If you want to trust in your estate plan’s functionality, you may need to learn more about a crucial component of many estate plans: revocable living trusts. What is a revocable living trust? How does it work? Should you consider building one for your property and assets? Although an attorney can quickly answer these questions for you and help you prepare your personalized estate plan, today we’re exploring the basics to help you get started.
What Is a Revocable Living Trust?
First of all, a trust is a legal document creating a fiduciary relationship in which the settlor’s property is to be managed and distributed during the settlor’s life and after their death, all for the benefit of one or more persons. In order to be classified as a revocable living trust, this agreement must be established during the settlor’s lifetime. It must also be amendable and revocable until the settlor’s death.
A revocable living trust typically involves three parties: the settlor, the trustee, and the beneficiary. The settlor (who can also be called the grantor or trustor) creates the trust and provides funding for the trust. More than one person can take on this role, such as a married couple creating a family trust. The trustee holds the title to the trust property and manages it for the benefit of the beneficiaries using the terms outlined in the trust. Often, the settlor will take on this role until their death. Finally, the beneficiary is the person for whose benefit the trust was created, and generally receives income or principal from the trust. The beneficiary can be a person or an entity, and the settlor can also act as the beneficiary until their death.
Creating, Changing, and Revoking a Trust
To set up a revocable living trust, please contact the attorneys at Carnahan, Evans, Cantwell & Brown. We can help you prepare the necessary legal documents and transfer your property to the trust. Once the trust is created, as the settlor you will still be able to revise it or revoke it at any time before your death. Following important changes in you and your family’s lives (marriage, birth, death, etc.), we urge you to review your trust and make any relevant changes. However, after your death, the trust becomes irrevocable and cannot be changed.
Advantages & Disadvantages
Revocable living trusts are popular for good reason. First, the property held in such a trust is not subject to probate, which will reduce the time, stress, and costs involved in the trust’s administration. In addition, the trust will remain a private matter, so you won’t have to worry about the trust’s assets or the identities of the beneficiaries becoming public knowledge. The trustee can actively manage any real estate properties, businesses, or other assets in the trust, maintaining them until they are distributed. Finally, a revocable trust ensures that your property remains available to be used for your benefit should you become physically or mentally incapable of managing your affairs.
However, a revocable living trust may not be the right option for everyone. It is more expensive to establish than a will, and it will take more time to set up due to the necessity of transferring the settlor’s assets into the trust. If you aren’t sure whether a revocable living trust suits your situation, discuss your concerns with an attorney.
Are you interested in forming a revocable living trust to administer and distribute your estate? To get started, contact the attorneys at Carnahan, Evans, Cantwell & Brown located in Springfield, Missouri. Our Estate Planning Group would be happy to assist you in all aspects of trust formation and administration, from choosing a trustee and communicating with beneficiaries to preparing and filing tax returns. For more information, please give us a call at 417-447-4400. We look forward to hearing from you!