A revocable living trust is a legal document that includes instructions concerning what should be done with your assets after you die. While a will does the same thing, a trust avoids the probate court while a will does not.
When creating the trust, you will become the Grantor of the trust which means the trust belongs to you and only you can make changes to it. You will also need to appoint someone as Trustee to manage the assets in the trust during your life and after your death or incapacity. You can appoint yourself, a family member, friend or a bank.
Finally, you will need to designate the beneficiaries. The beneficiaries are the people or organizations that will receive your assets after you die. A trust is flexible in this regard. For example, if you have two children and want your assets to be divided evenly between them, and if one of them should die before you then you probably will want their share should go to their children. This can be easily accomplished in a trust.
A trust can be flexible in other ways as well. If you want a share of your money to go to your teenage grandchildren, you could set up the trust so they do not receive the money until age 25. In another example, you can have the assets for a disabled child held by the trust so that the trustee can manage his or her share.
Finally, the careful wording and flexibility of a trust is useless unless the trust is funded. After the trust is drafted, you must transfer your assets into the trust. This means you need to re-title your assets, such as real estate, stocks and CD’s into the name of the trust.
While a Revocable Living Trust can simplify the administration of your assets by avoiding the probate court and laying out your wishes word for word, it is not something you should do alone. Only a qualified estate planning attorney can assist you in drafting a proper trust and retitling your assets into the trust.