A revocable living trust is, at its core, a way to ensure that the right person or people receive your estate and belongings when you die. A revocable living trust has some advantages over a will. With a will, your estate is subject to probate fee—a percentage of your assets taken by a representative or attorney—during the transfer of your estate to your beneficiaries. In a living revocable trust, the process has been established; there is no need for probate administration.
To better understand the nature of a revocable living trust, let’s take a look at the term’s three words, starting with the last one, “trust.”
Trust: A trust is a device in which one person, a settlor, transfers property or assets to someone else, a trustee. In a living revocable trust, as in all trusts, the trustee is the custodian of the trust and is responsible for transferring the contents of the trust to the beneficiaries. Through the trustee, the beneficiaries receive the settlor’s assets or property in the manner and time frame specified by the settlor.
A father might set up a living revocable trust to benefit his three children when he passes away. He wants the three children to receive his assets equally, and so he specifies this in his living revocable trust agreement. He also may set up his living revocable trust so that his children receive a quarterly allowance rather than a single payout. With a living revocable trust, there are many options.
Living: The word “living” in living revocable trust simply refers to the fact that the settlor is alive when he creates the trust. He has found a trustee, chosen his beneficiaries, and established what assets will be deposited into the trust. With a living revocable trust, the settlor may retain control over the trust and its assets as long as he is alive.
Revocable: The settlor may dissolve, amend or modify a living revocable trust at any point in his life, hence the word “revocable.” Why is this important? There are a myriad of reasons why you might want to change your living revocable trust. Divorce, estrangement and unexpected death of a beneficiary are just a few.
It’s time to drop the notion that the will is the standard way to see that your wishes are met when you’re gone. With a living revocable trust, you have control over your assets as well as greater confidentiality. That does not mean that a living revocable trust eliminates the need for a will entirely. In the event of your death, you can use a will to transfer your remaining assets to a living revocable trust!
At Safe Retirement Solutions, we have financial advisers who can review the living revocable trust and other options with you. Imagine the peace of mind of knowing that your final wishes will be respected!