If you have ever considered creating or using a revocable living trust but don’t know much about them, we have developed this brief list of tips to help you out. Revocable living trusts are one of the best estate planning tools you can choose to create. To help give you a better idea why revocable living trusts are so useful and what they can do for you, keep these tips in mind.
Revocable Living Trust Tip 1. Your trust is your company.
If you want to understand how a revocable living trust works, don’t think of it as a trust, but rather, a kind of corporation. A corporation is a legal creation that is allowed certain abilities. Specifically, corporations, like trusts, can own property independent of the people who manage or own them. When you create a revocable living trust, you create a legal entity that is allowed to own property. Because that legal entity can continue to exist even after you die, you can use the trust as an important piece of your estate plan.
Revocable Living Trust Tip 2. Your trust is never outside of your control.
When you create a revocable living trust you have to choose someone who will manage it. Like a corporation, the trust manager does not actually own the trust property. Instead, he or she is legally responsible for managing the property on behalf of the company. Similarly, the trust’s manager, called the trustee, has to look after all the property transferred into the trust’s name and manage it under the rules you establish when you created the trust itself.
However, most people who create a revocable living trust choose to serve as their own trustee. In other words, even though the trust will become the new owner of the property, you will be responsible for managing it.
Further, only the trust beneficiary can use the trust property. Since you will also be the beneficiary when you create a revocable living trust, you also get to use and benefit from anything it owns.
Revocable Living Trust Tip 3. You own the trust, and can change it when you want.
Another important facet of revocable living trusts is the fact that you, as the trust creator, can change the terms under which the trust operates whenever you like. This is why living trusts are known as “revocable.” If you want to change the living trust to better reflect your current desires, address other issues you think you left out, or for any other reason, you can update or change the trust when you wish. You can also revoke the trust and start over again if you need to.