What is a Revocable Living Trust?

A Revocable Living Trust is a powerful legal tool that you can use to preserve your assets and ensure your wishes are carried out when you are no longer here. This flexible estate planning strategy may provide financial security and peace of mind. We’ll discuss revocable living trusts’ main components and how they may aid you and your family in this post.

  • Understanding The Basics: 

A revocable living trust allows someone to manage and control money, real estate, and investments for another. This arrangement is usually used to make financial decisions if the trust’s creator becomes incapacitated due to accident, illness, or death. It is proactive way of ensuring assets are handled efficiently and according to the creator’s wishes.

  • Key Revocable Living Trust Functions: 

    1. The Grantor/Settlor: Creates the trust and transfers assets to the trust. 
    2. The Trustee: The trustee manages trust assets according the grantor’s instructions. The grantor usually serves as the initial trustee throughout their lifetime and designates a successor trustee to serve afterwards.
    3. Beneficiaries: These are the people the grantor chooses to receive the assets in the trust on the grantor’s terms, after the grantor passes away. 
  • Avoiding Probate & Protecting Assets: 

Many people establish a revocable living trust to protect their assets and make transferring them to heirs simpler after death. Trusts shield assets from probate court, a time-consuming and expensive legal process. This means beneficiaries may get trust assets promptly and without court intervention.

  • Flexibility & Control: 

The grantor enjoys significant control over trust assets during their lifetime. After placing assets in the trust, the grantor can buy, sell, or invest the trust assets as needed. Also, a revocable living trust allows the grantor to revise or terminate the trust if their circumstances change.

  • Assets To Transfer:

Remember that a revocable living trust may only be utilized after assets are transferred to it.  This is called funding the trust. Typical assets that can be used to fund the trust include:

    • Real estate
    • Checking and savings accounts
    • Business interest
    • Personal property

Creating a living trust is not for everyone. The best way to determine if a living trust is for you is by consulting your financial advisor and an estate planning attorney.  

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