A Revocable Living Trust (RLT) is a document that combines the attributes of a Durable Power of Attorney and a Will in that it allows for the preparation of the unexpected and the inevitable. A Trust in general is an agreement between the creator (Settlor) of the Trust and the Trustee to hold certain property for the benefit of a Beneficiary. In the case of a RLT, the Settlor, Trustee, and Beneficiary are the same person. Conceptually, it is holding your assets for yourself as a beneficiary in your name as Trustee. So why would you need a RLT if you already hold your assets for yourself? You may need a RLT to plan for the unexpected and the inevitable.
Operation During Incapacity
If you were to lose the ability to make financial decisions and have a RLT, the RLT will become irrevocable. At that point the next Trustee would step in and take care of the assets in your RLT for your benefit in accordance with your wishes as found in the trust instructions. The next Trustee will be able to allow you to stay in your home, will pay your other living expenses, and can coordinate paying for other expenses.
Operation After Death
After you pass away the RLT becomes irrevocable. Again, at that point, the next Trustee would step in and administer the assets in the Trust in accordance with your instructions for the next beneficiary. This can be over a period of time, in lump sum distributions, or for other reasons in a variety of ways.
Ease of Administration
A RLT transfer is a non-Probate transfer. This means that your Beneficiaries or next Trustee do not have to go through the court process of Probate. This allows the Trustee to follow your instruction immediately rather than waiting for the court process to be completed.
When the RLT becomes irrevocable, as described above, the assets will gain a level of asset protection whereby their creditors cannot reach the Trust assets because the beneficiaries do not own the assets in the Trust. The beneficiaries only benefit from the Trust assets.
Disclaimer: Do not rely on the above information as legal advice. This information does not create an attorney-client relationship. This information is for informational purposes only and is not meant to be legal advice. You should seek legal counsel from an attorney when approaching an Estate Planning issue to be sure you have a well thought out and integrated plan to achieve your goals. Past results do not guarantee future results.
If you determined after reading this page that you want an RLT, contact us for your free consultation.