you are alive, a revocable living trust lets you control the distribution of
your estate. Ownership of your property and assets is transferred into the
trust. You can serve as trustee or you can appoint another to serve as trustee.
If you serve as trustee, you must appoint a successor to serve as trustee upon
drafted and executed, a revocable living trust can avoid probate and delays as
the trust owns the assets not the deceased. Consult with your attorney
and/or CPA before deciding if a revocable living trust is the right choice for
Advantages to a Living Trust
- A husband and wife can
establish a joint revocable living trust.
- While the trustor serves
as a trustee or a co-trustee, a separate tax return is not required for
- The revocable living
trust allows the trustee to buy, sell and finance assets just as before.
- In the event of
incapacitation, management of the living trust passes to the successor
trustee without the necessity of a court-appointed conservator.
- The living trust can be
cancelled or changed at any time before death or incapacitation.
- Probate - including
multi-state probate - is avoided when assets are held in a living trust.
(Often probate takes 9 to 12 months.)
- Privacy. When a decedent
dies with a living trust, the provisions of that trust usually do not
- Litigation is
discouraged by a living trust.
- A married couple with a
living trust can reduce or eliminate federal estate taxes by setting up an
Exemption Trust. While both are alive the assets remain in the revocable
living trust. Upon the death of a spouse, the trust is split into two
trusts: the survivors trust and an exemption trust. (For tax purposes, the
surviving spouse and the exemption trust are two separate taxpayers.)
Disadvantages of a Living Trust
- A living trust will cost
more to set-up than an estate plan with only a will.
- A trust agreement with a
new will must be set-up.
- Transferring assets into
the living trust will require paperwork and incur costs not encountered
with a less elaborate estate plan.
- Handling an Exemption
Trust may require extra effort from the surviving spouse.
- Some lenders may require
property held in a living trust be removed from the living trust to refinance
Trustor: Creates the revocable living trust and transfers
major assets into it. (A husband and wife can have a joint living trust or each
can have their own living trust.)
Trustee: Manages the living trust's assets.
Beneficiary: Receives the assets of the living trust.
trustor, trustee and beneficiary are the same person(s).