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Estate Planning 101:
A Tutorial

Revocable Living Trusts

What is a Revocable Living Trust?

A Revocable Living Trust is simply a written set of instructions for the management and distribution of your property.

The major difference between a Will and a Revocable Living Trust is that the Revocable Living Trust is immediately effective. Since it is effective when it’s created and funded, it is instrumental in planning for the possibility of your incapacity from an illness or accident.

A Revocable Living Trust can be revised or revoked at any time prior to your incapacity or death. There is no initial income tax effect when you create your Trust, and you can continue to use your own tax identification number for your Trust.

Your Living Trust Team.

There are three primary roles when you create your Revocable Living Trust – the grantor, the trustee and the trust beneficiary.

  • Grantor.A Trust is created by a Trust Agreement. The grantor is person who creates and controls all aspects of the Trust. You are the grantor of your Trust.
  • Trustee. The trustee is the person (or company) who manages the Trust and the Trust property according to the terms and rules set forth in the Trust Agreement. You can be the initial trustee of your Trust or you can appoint another individual or a corporate trustee.
  • Backup Trustee. The backup trustee steps in when the initial trustee can’t act any more (usually because of death, incapacity or resignation). There is no court involvement when the backup trustee takes control of the trust management.
  • Beneficiary. The trust is held and used for the benefit of the person known as the beneficiary. Initially, you are the primary beneficiary of your trust. Your wife and children may also be named as beneficiaries.

    • During your lifetime, your trust is generally held and used in your best interests. On your death, your property is either retained in trust or distributed to your beneficiaries, as you directed. There is no court involvement.

    The Disadvantages of a Revocable Living Trust.

    The Revocable Living Trust combines all the advantages of a Will with the ability to transfer control of your property if you become incapacitated, all without involvement of the courts.

    There are two slight disadvantages of a Revocable Living Trust. First, it forces you to organize your property so that the property can be transferred to the Trust. Second, certain fees are paid currently, rather than after your death. All in all, nothing significant.

    Lessons in Estate Planning 101:

    1. What is Estate Planning?
    2. Objectives of Estate Planning.
    3. When is Estate Planning Important?
    4. Does Everyone Need Estate Planning?
    5. When Should I Do My Estate Planning?
    6. What's Included in My Estate?
    7. What is Probate?
    8. Common Estate Plans.
    9. The Problems with Doing Nothing
    10. The Problems with Joint Ownership.
    11. The Problems with Giving Away Assets.
    12. The Problems with Beneficiary Transfers.
    13. The Advantages of a Will.
    14. Revocable Living Trusts
    15. Powers of Attorney for Property.
    16. Controlling Medical Decisions.
    17. Estate and Gift Taxes.
    18. Ways to Reduce Your Estate Taxes

    What do I do Next?

    Some people think of Estate Planning as similar to building a home which keeps your family safe from the weather. These lessons are a foundation. You can build on this information to complete a solid structure, which will protect you and your family from a storm. This safe spot is made up a several options. The following articles and posts will help you prepare for completion of the estate planning process.

    If you want to protect your family NOW,

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    Contact John

    I look forward to helping you.