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A Revocable Living Trust is a legal document that holds your assets during your lifetime and directs how they are managed and distributed after your death. While it functions similarly to a will, a trust offers additional benefits by operating both during life and after death.
During your lifetime, you retain full control. You may add or remove assets, amend the terms, or revoke the trust entirely as long as you remain competent. The trust works alongside a pour-over will, which ensures that any assets not titled in the trust at death are transferred into it.
One of the primary advantages of a Revocable Living Trust is probate avoidance. Unlike a will, which becomes a public document after death, a trust allows for private asset distribution. This privacy protects beneficiaries and prevents unnecessary public exposure of financial details.
A revocable trust also provides continuity if you become incapacitated. A successor trustee can step in to manage trust assets without court intervention, avoiding guardianship proceedings and delays. While a revocable trust does not provide asset protection or Medicaid planning benefits, it serves as a powerful foundation for a comprehensive estate plan.
What happens to my trust if I become incapacitated?
If your trust is properly funded, a successor trustee can immediately manage trust assets on your behalf without court involvement.
Are there disadvantages to a revocable living trust?
Yes. Trusts require upfront planning, proper asset titling, and potential trustee fees. However, many families find these costs are outweighed by the benefits of probate avoidance and continuity.
Are there tax consequences to having a revocable living trust?
During your lifetime, trust assets are taxed under your Social Security number, just as they would be if held individually. A revocable trust does not eliminate estate taxes, but it can be structured to support tax-efficient planning.
Can I change or revoke my trust?
Yes. As long as you are competent, you may amend or revoke your revocable living trust at any time.
What happens to the trust after my death?
At death, the trust becomes irrevocable. The trustee distributes assets according to the trust terms and handles final administrative matters such as accounting and tax filings.
Do I still need other estate planning documents?
Yes. A revocable living trust is only one part of an estate plan. Most plans also include a pour-over will, a financial power of attorney, and health care documents.
