Many people have a perception that trusts are only for the rich or people with a lot of assets, and not for them and their situation, but our Troy, MI revocable trust lawyer knows how valuable a trust can be. Most estate planners will tell their clients that when creating an estate plan, that a trust is a better option for the client in estate planning. In this blog entry we will discuss what a revocable living trust is, and some of its benefits.
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Understanding Revocable Living Trusts
First of all, there are many kinds of trusts that serve many different purposes. Two main types of trusts are revocable and irrevocable trusts. For the purposes of this discussion, we are going to be talking about a revocable living trust, which is one of the most frequently used trusts in estate planning.
A revocable living trust is a legal entity created by either a single person or perhaps a couple of people to manage and distribute assets while they are still living and after they are deceased. It is called a revocable trust because the grantor(s) creating the trust can normally amend or revoke the trust at any time prior to their death or incapacity, giving them more control over the assets during their lifetime.
The person or persons who create the trust are called the grantor(s). The person or persons in charge of managing and distributing trust assets are called the trustee or co-trustees. The people entitled to receive distributions of the trust’s assets are the beneficiaries.
Generally speaking, with a revocable living trust, the grantors are most often also the initial trustees and primary beneficiaries of the trust while they are still living. However, a revocable living trust allows the grantors to name someone else as trustee of the trust while they are still living, or perhaps make distributions to others during the grantor’s lifetime. One example of such would be a provision in the trust allowing a distribution to a child or grandchild to pay for their college education, even while the grantor is still living.
The Benefits of a Revocable Living Trust
With a revocable living trust, the grantors direct the trustees how assets are to be distributed both while the grantors are living and after the grantors have passed away. For assets distributed after the grantor has passed away, these assets would be distributed after the grantor’s final expenses have been paid. These distributions can include specific bequests such as giving specific items or dollar amounts to specific beneficiaries as well as dividing up the assets remaining after the specific bequests have been made.
However, creating a revocable living trust alone is not the end of the process for the grantors. The grantor must also fund the revocable living trust for the benefits of the revocable living trust to be maximized. Funding is the process of transferring the grantor’s assets, such as money, property, and investments, into a legally established trust so that the assets can be managed and distributed according to the terms of the trust. Failing to properly fund the trust can lead to consequences such as the necessity of a probate estate to distribute the assets.
Contact Our Troy Revocable Trust Lawyer Today
If you think that a revocable trust is right for you, you should not attempt to do so without dedicated legal representation. Our team is here to help. Contact Gudeman & Associates, P.C. today to schedule a consultation.
