Basics of Revocable Living Trusts
Revocable living trusts are a common part of elder law and estate planning. In fact, revocable living trusts are one of the most common estate planning tools. Therefore, it is important to have a clear understanding about living trusts, what they are, and what they do.
Talking about trusts is sometimes like speaking a different language because there are many words and terms unique to trusts and similar instruments. This section will give a brief description of some of the terms that you need to know to understand revocable living trusts.:
- Grantor/Settlor – A grantor (also called a settlor) is the person who provides the property that goes into the trust. For example, this could be a grandfather who leaves assets to his granddaughter.
- Beneficiary – A beneficiary is the person (or people) who will benefit from the trust. In this example it would be the granddaughter.
- Trustee – A trustee is a person whose job it is to make sure that the property in the trust is safe until it goes to the beneficiary. Trustees are responsible for investing the money and/or other financial duties. The grantor can name himself or herself as trustee and/or a trusted other person.
Why is it Called a Revocable Living Trust?
It is called a revocable trust because the grantor is able to undo the trust if he or she wants to. The trust is “living” because it is created during the lifetime of the grantor. Finally, a “trust” is generally property given by one person (the grantor), for the benefit of another (the beneficiary), but held by a third person (the trustee) for a period of time.
Why A Revocable Living Trust Instead of a Will?
As mentioned above, often times a revocable living trust is used as an estate planning tool. Therefore the property will pass at the time of someone’s death, similar to a will. A revocable living trust is considered a “will substitute” and a way to transfer property outside the confines of a will. Keep in mind however that a will can do much more than transfer property, such as name guardians for children, and commit other wishes to writing. There are many reasons that someone may choose to transfer property through a revocable living trust instead of a will; for example:
- The property avoids probate.
- Wills are public documents while trusts can be kept secret.
- A trustee is in place to manage your money if you become incapacitated.
- You can eliminate the chance of a will dispute.
- This gives you a way to manage your money during your lifetime.
- A trust can be used for the grantor’s benefit during his or her lifetime.
The Villages Estate Planning Attorneys
If you are thinking about planning your estate or need more information about living trusts, you should talk to a knowledgeable estate planning attorney who can help answer your questions. Our experienced estate planning attorneys at the Millhorn Elder Law Planning Group in the Villages can help you understand the specifics of living trusts and other estate planning tools.