A trust is a legal ownership vehicle where a settlor transfers ownership of property to the trust, the property is managed by a trustee, and it is utilized by the beneficiary. While someone may have two of the three trust roles – settlor, trustee, or beneficiary – no one person can hold all three roles.
There are many varieties of trusts, the rules and how they function vary greatly depending on whether they are revocable (meaning the settlor can terminate the trust) or irrevocable (the settlor cannot terminate the trust).
Trusts are also living, meaning they are formed and effective while the settlor is alive, or testamentary, meaning they are formed when the settlor dies.
Revocable Living Trust
A revocable living trust is a type of trust which holds title to assets the settlor, often you, transfer to the trust. You, your children, and spouse are often the beneficiaries of the trust which allows you access and use of your property during your life. For estate planning purposes, you should also have a Pour Over Will as a safeguard to ensure any property not transferred to the living trust will end up in the trust when you die.
Revocable living trusts are powerful options for your use in estate planning. Revocable living trusts allow you to transfer property to the trust instrument while you are alive, retain control over the property, and then convey the property to designated people or entities after your death – all happening outside of the probate court.
Though robust, they should not be the default tool for estate planning and consider all aspects of your situation before using one.
If you are interested in a living trust, or other trust, please call me for an appointment.