A Revocable Living Trust is a trust created during your lifetime which is fully revocable and amendable by the creator. The best way to think of a revocable living trust is as a set of instructions to the trustee. The trust document will always identify the Grantor, the Beneficiary and the Trustee. It should also include provisions for successor trustees (in case the trustee can’t continue serving in that capacity) and it should also contain provisions for successor beneficiaries.
All revocable living trusts should have the following similar provisions:
√ Provision which summarizes the Grantor’s purpose in creating the trust. √ Discussion on how the trust assets are to be held and administered for the benefit of the current and future beneficiaries. √ Detailed provisions that instruct the trustee on how to hold the trust assets and how to administer the trust.
Description of the trustee’s powers, which should include:
- How the trustee should invest the trust assets.
- Under what circumstances the trustee should distribute trust assets.
- What happens if the beneficiary becomes incapacitated or dies.
- How to transition to a new trustee, if necessary.
Many people are turning to revocable living trusts as a way to avoid probate since trust assets are transferred to the trust while you are alive and the trust document provides instructions and the power to dispose of them upon your death or incapacity.
A revocable living trust has three primary participants:
|The Grantor||The Trustee||The Beneficiary|