The term revocable living trust typically refers to a trust that is created during the lifetime of a particular individual, according to the American Bar Association. At its essence, a revocable living trust is based on a legal instrument through which certain assets are transferred to the ownership of the trust itself.

A trustee is designated within the trust instrument itself. The trustee is the individual designated to manage the affairs of the trust on behalf of the beneficiary or beneficiaries. The trust instrument also identifies that individual or those individuals who are the beneficiaries of the trust. As the term suggests, a beneficiary is an individual who benefits from the trust. The creator of the trust can be a beneficiary of the trust. Successor beneficiaries can be designated who enjoy the benefits of the trust after the initial beneficiary dies.

A key element of a revocable living trust is that the creator is able to make changes to it during the course of his or her lifetime. The creator can change any of the specific terms included within the instrument. Indeed, if the creator so desires, he or she can eliminate the revocable living trust.

Probate and a Revocable Living Trust

One of the primary reasons for the creation of a revocable living trust is that it permits the probate process to be bypassed upon the death of the creator of the trust or the death of a trust beneficiary. Bypassing probate saves time and money in the final analysis.

Taxes and a Revocable Living Trust

What a revocable living trust does not do is permit tax avoidance. Although probate may be avoided with this type off trust, taxes must be paid as owed.

Revocable Living Trust Versus Irrevocable Living Trust

As the monikers associated with these two types of trusts indicate, revocability is the key distinction between these two types of trusts. The creator can terminate a revocable derivation. On the other hand, once a creator appropriately executes an irrevocable trust instrument, that trust generally cannot be altered or terminated.

A skilled, experienced Pennsylvania estate attorney can assist a person in deciding on whether or not a revocable living trust is a suitable estate planning structure. Typically, there is no charge for an initial consultation to discuss a revocable living trust.

Estate planning is crucial. One estate planning vehicle worth considering is a revocable living trust. The first step in the process of determining whether establishing a revocable living trust is the proper course is understanding the essential elements of this type of trust.

Three Primary Reasons for Establishing a Revocable Living Trust

The reasons a person may need a revocable living trust are unique to his or her situation. However, there are three primary, common reasons why an individual may desire to establish a revocable living trust.

The first primary reason to establish a revocable living trust is to provide for loved ones but to protect them from their own thoughtless acts when it comes to finances. The reality is that oftentimes when an individual obtains money through the estate process, those funds are spent quickly and even irresponsible. A revocable living trust lessens the likelihood that this reckless use of funds occurs.

The second primary reason to establish a revocable living trust is avoiding the probate process. The probate process can be time consuming and expensive. By eliminating the probate process, the beneficiaries of the trust save time and money.

The final primary reason to establish a revocable living trust is to lessen tax obligations. Probating an estate is not only expensive and time consuming in and of itself, it also oftentimes results in a sizable tax liability.

How to Fund a Revocable Living Trust

There are a variety of ways in which a revocable living trust can be funded. Financial accounts of all types can be included in a trust. These include bank account and investment accounts.

Real estate can be included in a revocable living trust. This can include residential as well as commercial property. An estate lawyer is experienced in assisting a person in identifying what property can and should be included in a revocable living trust.

Retaining a Lawyer for a Revocable Living Trust

There are estate attorneys that focus on creating revocable living trusts. A qualified attorney can schedule an initial consultation with a prospective client to discuss that individual’s estate planning goals and objectives, including whether establishing a revocable trust is the proper course to take. An estate lawyer does not charge a fee for an initial consultation.