Legal structure
Revocable Living Trust
A trust established during the grantor's lifetime in which the grantor typically retains the power to amend, restate, or revoke the arrangement.
Typical purpose
Commonly used to organize assets, plan for incapacity, and potentially avoid probate for assets properly titled in the trust.
How it operates
The grantor often serves as initial trustee, manages assets as before, and names a successor trustee to act upon incapacity or death.
Who might use it
Individuals and couples seeking an organized estate plan and continuity of management.
Assets commonly involved
- ◆Primary residence
- ◆Brokerage accounts
- ◆Bank accounts
- ◆Business interests
- ◆Personal property
Potential advantages
- ◆Flexibility to change terms
- ◆Incapacity planning
- ◆May reduce probate for funded assets
- ◆Privacy compared to a public will
Legal and tax limitations
- ◆Generally no creditor protection for the grantor
- ◆Usually treated as a grantor trust for income tax
- ◆Only funded assets avoid probate
- ◆Does not by itself reduce estate taxes
Establishment & administration
- ◆Written trust agreement
- ◆Proper execution per state law
- ◆Retitling of assets
- ◆Pour-over will often recommended
Common mistakes
- ◆Signing the document but never funding it
- ◆Failing to update beneficiary designations
- ◆Naming an unprepared successor trustee
Questions to ask a professional
- ◆Which state's law should govern this arrangement, and why?
- ◆Who should serve as trustee and successor trustee?
- ◆How will the trust be taxed at the federal and state level?
- ◆What assets must be retitled, and who handles the transfers?
- ◆What ongoing records, filings, and reports will be required?
Educational information only. Trust law varies by state; consult qualified legal, tax, and financial professionals before acting.
Next step
Move from understanding to a properly reviewed plan.
Discuss a Revocable Living Trust With TangierEducational information only. Not legal, tax, or investment advice.