Do I Want a Revocable or Irrevocable Living Trust?
Do I Want a Revocable or Irrevocable Living Trust?
Liz Smith Thu, February 23, 2023
As you get older, there are two major things that you should consider. One is retirement. Having the necessary retirement savings and a financial plan will allow you to live the kind of life you want to live during your golden years. The second thing to account for is what will happen to your estate, and estate planning is not just for rich people. And having a strategy in place to pass on your assets will make it smoother for you and your loved ones later in life. A local financial advisor can help you with living trusts and other estate planning issues.
Defining a Revocable Living Trust
At the most basic level, a revocable living trust, also known simply as a revocable trust, is a written document that determines how your assets will be handled after you die. Assets can include real estate, valuable possessions, bank accounts and investments.
As with all living trusts, you create it during your lifetime. (There are also testamentary trusts, which don’t take effect until after you die.) Assets you place in the trust are then transferred to your designated beneficiaries upon your death. What sets a revocable living trust apart is that you can change or cancel the provisions at any time. Hence, the term “revocable” in its name.
Before we go into more detail about why you should or shouldn't get a revocable living trust, there are some terms you should understand. (You may also want to brush up on the basics of how trusts work.) Also, know that the exact laws governing trusts vary by state. The rules in Arizona or Florida won't be same same as those in Oregon or Michigan.
The person who creates a trust is the trust-maker. You will also see the terms trustor and grantor. All three words refer to the same person. Typically, the trust-maker of a revocable living trust is also the trustee. The trustee is the person who handles administration of a trust – such as keeping track of income and tax returns. One thing that you will do in your trust documents is name a successor trustee. This is the person who will manage the trust when you no longer can. The final term to know is beneficiaries. These are the people, organizations or other entities that will receive assets from your trust after your death.
How to Create a Revocable Living Trust
If you think that a revocable living trust is right for you, get ready. You will have to do most of the work upfront so that the dissemination of your estate is easier down the road. Start by taking an inventory of your assets. Then, think about who you want to inherit your assets and who you can assign as trustee. Once the document is drawn up, transfer any property you want covered into the trust.
https://finance.yahoo.com/news/revocable-living-trust-210600597.html