What is a Revocable (Living) Trust?

A revocable trust, also known as a living trust or inter vivos trust, is a legal arrangement in which an individual (the grantor or settlor) places their assets into a trust during their lifetime. The grantor retains control over the trust and can make changes to it, including revoking or amending the trust’s terms as they see fit. Here are some key features and benefits of a revocable trust:

⦁ Control: One of the primary advantages of a revocable trust is that the grantor maintains control over the assets placed into the trust. They can manage and use the assets as they normally would, and they can alter or terminate the trust at any time.

⦁ Avoiding Probate: Assets held in a revocable trust typically bypass the probate process when the grantor passes away. Probate is the legal process through which a court validates a will and oversees the distribution of assets to beneficiaries. By avoiding probate, the assets can be distributed to heirs more quickly and with greater privacy.

⦁ Privacy: Unlike a will, which becomes a public document when it goes through probate, the terms of a revocable trust remain private. This can be especially important for those who value their privacy or have complex family or financial situations they wish to keep confidential.

⦁ Incapacity Planning: A revocable trust can be useful for planning for incapacity. If the grantor becomes unable to manage their affairs due to illness or disability, a successor trustee (appointed by the grantor) can step in to manage the trust assets on their behalf.

⦁ Flexibility: The grantor can make changes to the trust, such as adding or removing assets, changing beneficiaries, or amending the terms, as long as they have mental capacity. This flexibility makes it a useful estate planning tool that can adapt to changing circumstances.

⦁ Avoiding Ancillary Probate: For individuals who own property in multiple states, a revocable trust can help avoid ancillary probate, which is the additional probate process required in each state where real estate is owned. Placing the property in the trust can simplify the transfer of out-of-state assets.

⦁ Creditor Protection: While a revocable trust is primarily used for management and distribution of assets during the grantor’s lifetime and after their death, it does not offer the same level of creditor protection as an irrevocable trust. Assets in a revocable trust are generally still considered part of the grantor’s estate for creditor claims.

It’s important to note that a revocable trust does not provide the same level of asset protection and tax planning benefits as an irrevocable trust. For specific estate planning needs, individuals should consult with an attorney or estate planning professional to determine the most appropriate type of trust or combination of estate planning tools for their situation. Additionally, the effectiveness of a revocable trust depends on the proper funding of the trust, which involves transferring assets into the trust’s name.

To learn more about estate planning and elder law, visit Estate and Elder Planning by David Wingate at www.davidwingate.com. For an Initial Consultation, call (301) 663-9230. We can assist you with powers of attorneys, living wills, wills, trusts, Medicaid planning, and asset protection. With office locations in Frederick, Washington, and Montgomery Counties, Maryland, we are here to provide you with peace of mind.
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