What is a Revocable Trust?
A revocable trust, often called a living trust, is a flexible estate planning tool that allows an individual, known as the grantor, to create a trust during their lifetime while retaining full control over its terms and assets. The grantor can modify, amend, or completely revoke the trust at any time, provided they remain mentally competent. This distinguishes it from an irrevocable trust, which is generally unchangeable once established. Assets placed in a revocable trust, such as real estate, bank accounts, or investments, are managed by a trustee, often the grantor themselves, for the benefit of designated beneficiaries.
The primary advantage of a revocable trust is its flexibility. The grantor can adjust the trust’s terms as life circumstances change, such as adding or removing beneficiaries, altering asset distributions, or dissolving the trust entirely. It also allows for efficient estate management, as assets in the trust typically avoid probate, the often lengthy and costly legal process of distributing a deceased person’s estate. This ensures quicker, private transfer of assets to beneficiaries. Additionally, a revocable trust can include provisions for incapacity, allowing a successor trustee to manage assets if the grantor becomes unable to do so.
However, a revocable trust does not provide tax benefits or asset protection from creditors, as the grantor retains control over the assets. Upon the grantor’s death, the trust typically becomes irrevocable, and assets are distributed according to its terms. For those seeking a balance of control and estate planning efficiency, a revocable trust is a popular choice, but consulting an attorney is essential to ensure it aligns with individual