A Revocable Living Trust (sometimes referred to as a “Living Trust”) is a type of Trust you create during your lifetime. While you are alive, you act as the Grantor (the person who creates the Trust), the Trustee, and the beneficiary. This allows you to use all of the Trust assets for your benefit. When you pass away, your Revocable Living Trust appoints a Successor Trustee who will be responsible for distributing your assets according to the instructions you stated in your Living Trust (much like a Will does, but without probate court involvement). After the Successor Trustee distributes all of the assets, the Living Trust is concluded and dissolved.
Revocable Living Trusts have many advantages:
- Avoiding the probate process. The primary reason most people create a Revocable Living Trust is to avoid probate. The Revocable Living Trusts are generally not subject to the probate process because the Trust, not you, owns the assets. If you own real estate in other states when you pass away, a probate must be opened in each state where the properties are located. Transferring those properties to a Revocable Living Trust will avoid the cost and delay of opening a probate in each state where you owned real estate.
- Maintaining Privacy. Documents filed in probate court are public and potentially accessible by anyone. If your estate has to go through probate, there is a chance that the general public could learn about your Will and your assets. In contrast, Revocable Living Trusts are private documents administered without court involvement, which keeps your matters private.
- Managing Your Assets If You Are Incapacitated. When you create a Revocable Living Trust, you are the Trustee for your lifetime or until you become unable to serve as the Trustee for any reason. Should you become incapable of managing your own affairs, the Successor Trustee you have appointed in your Revocable Living Trust takes over the Trust and manages the assets for your benefit until you are no longer incapacitated.