2nd May 2017
A Revocable Living Trust, or inter vivos trust, is another name for a living trust. It essentially is a legal document created by the trust maker in order to determine who will take possession and control of their assets after their death, or should they become incapacitated. It covers the events and conditions that may affect the trust maker’s while they are still alive, as well as should they become unable to make their own decisions. Finally, a revocable living trust will determine what happens with assets and so forth after the death of the grantor.
As the creator of a revocable living trust, you as the creator have the sole ability to revoke or make amendments. Also, you have control over what property and assets are included in the entity. In fact, in the majority of revocable living trusts, the trust maker is both the beneficiary and the trustee, up until the time of their death or incapacitation. Often, the grantor (trust maker) will appoint their spouse or significant other as a secondary trustee. They might also appoint a trust company as a beneficiary or trustee.
How do you fund a revocable living trust?
A revocable trust may be funded with assets or properties including but not limited to: saving and checking accounts, stocks, bonds and brokerage accounts, and any property owned by the grantor. You might not choose to fund your trust until after your death or in the event you become incapacitated. The terms of a revocable living trust are detailed in a binding legal document that is referred to is the trust agreement or declaration of trust and must be signed by both the trustee and the creator.
Advantages of Revocable Living Trust
You can save a great deal of money with a revocable living trust versus a will, as you will not have to account for the costs initiated during the probate process which includes, but are not limited to: appraisal fees, court costs, attorney fees and executor’s commissions.
A major advantage of a revocable living trust is that unlike a standard will and testament, all terms are private including the names of the trustees. Also, all list of assets and properties remain private. A will becomes public record once it enters the probate process.
Unlike a will, you have full control over the terms of a revocable living trust. Your trustee has more control over the terms of a revocable living trust than would the executor of a will.
- Ability to plan for the event that you become disabled or incapacitated
Another advantage of a revocable living trust over a will is that it gives you a way to have a detailed plan in motion in the unfortunate event that you either become incapacitated or disabled. This would benefit your spouse in that you can set up terms and conditions for your estate and assets in the event that you are no longer able to make decisions.
Other advantages of a revocable living trust include:
- Prevents the court from interfering
- Reduces emotional distress for your loved ones
- Saves your family from unnecessary court appearances
- Organizes all of your assets into one plan
- Lets you set the exact terms and conditions of your assets
- Assets are protected from creditors, divorce proceedings, and so forth
- Can be changed or revoked at any time
- Provides peace of mind for you and your loved ones
Can a Revocable Living Trust Be Challenged or Contested?
A slight disadvantage of a revocable living trust is that in can in fact be challenged by a disgruntled trustee or heir. They may allege that the grantor was not of sound mind at the time the revocable trust was formed. The time frame for challenging the validity of a revocable living trust is approximately 2 years (this will vary by state) and costs are paid from the assets of the trust. However, with the help of a qualified estate attorney, you may be able to set up a “no contest” clause for your revocable living trust in accordance with your other estate planning documents.
If you would like to create a revocable living trust, contact Tompkins Law for professional advice regarding estate planning. Our team of expert estate lawyers have years of experience and can assist you with any questions or concerns you may have regarding a revocable living trust or any other estate planning matters.
Call us at 1-714-385-0044 for a free and confidential consultation. We will help provide you with peace of mind in planning for the well-being of your loved ones at the time of your passing.