A Revocable Living Trust is an estate planning method for avoiding probate, among other things. When you establish a Revocable Living Trust, you transfer your assets to a Trustee, who will manage them on your behalf and, after you pass away, on behalf of your remainder beneficiaries. Your Trust Agreement is the document that establishes the trust and gives your Trustee instructions on how to manage the trust assets.
The person establishing a Revocable Living Trust is called the Trustmaker, or Trustor, and he or she is usually also the initial Trustee and beneficiary. You’ll name a Successor Trustee in the Trust Agreement, and this is the person who will take over your trust when you pass away. He or she will manage and distribute your assets to your beneficiaries, outside of probate, according to the instructions in your Trust Agreement.
Aside from allowing you to avoid probate, a properly established trust can help you avoid the need for a court-appointed guardian or conservator if you become mentally incapacitated. In your Trust Agreement, you can name a Disability Trustee. This person will take over your finances and manage them on your behalf if you suffer an accident or illness that renders you incapable of handling your own financial affairs.
Aside from allowing you to avoid both death probate and living probate, one of the benefits of a Revocable Living Trust is its flexibility. You can change the terms of your trust, add or change Trustees or beneficiaries, or even cancel your trust in its entirety at any point during your life – as long as you are mentally competent.
Like all estate planning methods, Revocable Living Trusts are appropriate for some people and not for others. To determine whether a Revocable Living Trust is the right estate planning method for your situation, consult with a qualified estate planning attorney.