A revocable living trust, which is often just called a living trust, is a legal tool that is created to ‘hold’ the assets of an individual. This individual, known as a grantor, can control and manage all the assets placed within the trust, or they can assign another party to do this on their behalf. Having assets held in a trust like this can provide a variety of different benefits both now, and after the grantor has passed away.
While the Grantor Is Alive
When a revocable living trust is made, the grantor will be able to treat the assets within the trust much the same as if they weren’t in a trust at all. They can invest the money, move investments around, and much more. The money made from the trust can be either kept in the trust, or diverted out to the grantor, or another party. Since this is a revocable trust, the grantor can even close out the trust entirely and move all the assets back into their own name.
Should the Grantor Become Incapacitated
When making a revocable living trust, someone should be identified as the successor trustee. This person (or group) will take over control of the trust should the grantor become incapacitated. The trust will be managed on the grantor’s behalf. The trustee is legally obligated to make decisions with the best interest of the grantor in mind. They will manage all the assets within the trust until either the grantor passes away, or they recover their ability to manage it on their own. Having someone lined up to ensure these assets are properly managed is an important part of long-term care planning, since they can direct the assets to be used to provide care for the grantor.
Should the Grantor Die
If a revocable living trust is in place when the grantor passes away, it automatically becomes an irrevocable trust. The successor trustee will step in to conduct any final actions to the trust such as paying the grantor’s final bills, settling any debts and/or taxes, and finally, distributing any assets within the trust according to the wishes of the grantor. In most situations, an irrevocable trust won’t have to go through the probate courts, which is a big benefit for the loved ones of the grantor.
If you would like to learn more about a revocable living trust, or you would like to start or update your estate plan, please contact Collins Law Office, LLC. We will be more than happy to answer any questions you have, and help ensure your estate is properly handled today, tomorrow, and long into the future.