A “revocable trust” or “revocable living trust” is probably the most common estate planning trust around. It is widely used because of its flexibility, ease of administration and ability to avoid probate. When a revocable trust is created it specifies who will manage the trust (a trustee) and who the beneficiaries are. Often times the person creating the trust is the initial trustee and its “business as usual” during their lifetime. Once the trust creator passes away, the trust language nominates a successor trustee and outlines in what fashion they must distribute the trust estate. A revocable living trust is created during the creators life time and they can “revoke” or terminate the trust whenever they wish. The trust creator can also amend the trust and change the trustees, beneficiaries, or other trust language.
An important step after creating a revocable trust is funding the trust, this means placing assets in the trust. There are certain advantages of having a trust own property, like real estate. One advantage is that anything owned by the trust can avoid probate for faster, more private and less costly estate administration. There are also disability planning advantages of owning a trust, if the trust owns property and the trust creator/trustee becomes mentally disabled then the successor trustee can step in without court intervention and manage the trust assets. Their are also certain types of property like qualified retirement account that should not be owned outright by the trust during the trust creators lifetime. It is important to speak with an attorney on how to properly fund a trust because if it is done incorrectly, the creators intentions could be frustrated.