REVOCABLE LIVING TRUST

A Revocable Living Trust (RLT) is a legal document that looks a lot like a will.  In fact, it does what most people think a will does--and much more.  Because there is no probate with an RLT, all expensive court proceedings and delays are eliminated, your privacy is preserved and the emotional stress on your family is minimized.  It can also reduce/eliminate estate taxes, is extremely hard to contest, and can even serve as an effective pre-nuptial agreement.

How the Revocable Living Trust works:

When you set up an RLT, you create three (3) personages in the trust--the Grantor (the person who owns the assets), the Trustee (the person who administrates the trust) and the Beneficiary (the person who benefits from the assets in the trust).  You can be all three at one time.

The person who establishes an RLT is the Grantor of the trust.  You then, as Grantor, transfer all of your property to the Trust.  This is done by re-titling accounts and “deeding” property to yourself as the Trustee of the trust.  As Grantor and Trustee you retain full and unhindered control over the trust with its property.  You, as Beneficiary, will have full beneficial use of the trust property just as you now have full use and enjoyment of you property titled in your name.

This is the key issue as to the avoidance of the Probate Court with an RLT.  Since there is no longer any property in your name because you have already transferred title to yourself as trustee during your lifetime (that is why it is called a “living” trust), there is nothing in your estate, by virtue of the transfers, to require a conservatorship in the event of your incapacitation during your lifetime, or to require probate at your death.

 Many uses available with an RLT:

To list just a few of the many wonderful features of an RLT in addition to the avoidance of probate with its fees, delays, publicity, and inconvenience--with a trust you can, among other features, control your estate even after your death.  The trust allows you to delegate powers to the (successor) trustee to hold certain assets in trust for an elected (by you) period of time for certain beneficiaries.  You can control who gets what, how much he gets, and when he gets it.  In many cases, it may not be best for an heir to receive an outright distribution of principal especially if that heir is young or has not shown money management skills.

Another function of an RLT (for married couples) is the ability to hold that portion of the estate which belonged to the first spouse to die (1/2 of jointly owned property and sole and separate property) “in trust” until the death of the surviving spouse.  In addition to being an estate tax avoidance device, the trust can help preserve 1/2 of the estate in the event of a “spend-down” of assets because of an extended illness or nursing home care bills of the surviving spouse.

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