Revocable Living Trusts
by Christopher L. Kelly, Esq.
So far in our series on basic estate planning documents, we’ve covered the Last Will and Testament, powers of attorney, and medical advance directives. In this final installment, we’re talking about revocable living trusts, or as they are more commonly called, living trusts (LT).
A living trust is a legal arrangement by which a person (known as the grantor) during his or her lifetime transfers assets to another person or entity (known as a trustee) for the grantor’s benefit. The arrangement is documented in a trust document that includes language allowing the grantor the option of terminating the trust whenever the grantor would like, making the trust revocable. The document details how property is to be managed during the grantor’s lifetime and also how the property is to be distributed from the trust when the grantor dies.
Once an LT is created, the grantor transfers assets into the name of the trust. This may require retitling bank accounts or filing new deeds to transfer real estate into the trust. It is imperative that assets are correctly transferred to the trust, as the terms of the LT only control property that has been transferred into the trust.
In an LT, the Grantor usually names him/herself to be the trustee for his/her lifetime. At the same time, the Grantor generally names a successor trustee who will manage the trust if the grantor should become incompetent or die. In the event of death, the trustee functions much like an executor with a last will and testament in settling the deceased person’s estate and making sure that his/her intentions are honored.
One of the benefits of a living trust is the fact that it does not have to be probated. Probate is the legal process by which a will is reviewed and approved by a probate judge in the county where the person resided at the time of his/her death. Because the will is being reviewed by a court, it becomes a part of the public record. The will must be recognized by the court before any property can be conveyed or given to anyone else. In contrast, the property in a trust can be conveyed to others without the necessity of going to court. Since a trust does not have to be recognized by the court, it is highly likely the trust will never be a public document.
Whether a living trust is the right option for you depends on your unique situation. Despite many articles in the financial media that declare everyone must have a living trust, the reality is that for most people, it is not the best option. The complexity it adds to a person’s life while he/she is alive may not outweigh the benefits enjoyed after someone is dead, so it is important to meet with an experienced estate planning attorney to determine the approach and documents most suitable for accomplishing your estate planning goals.
Ready to get started?
You can reach us via phone at (615) 371-2029 or fill out this form.
Please note that the advice offered in this article is not intended to be construed as tax, legal or accounting advice. This material has been prepared for general informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice for the reader. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
