Revocable Living Trust
Ahearn Kershman Law Form helps you navigate the estate planning process, and a revocable living trust is often at the center of a client's estate plan. Revocable living trusts are one of the most flexible and versatile estate planning tools and can be used for many purposes, including probate avoidance and privacy. They also allow the creator to centralize control of the estate's assets if he or she becomes incapacitated. Revocable living trusts are not just for the elderly and wealthy; clients of all ages and stations in life set up revocable living trusts every day.
Our attorneys can work closely with you to establish a trust that addresses your unique needs and goals. We are also available to help you follow through with the actions you need to take after your trust is established, including funding the trust with your assets to ensure probate avoidance.
What Is the Difference Between a Will and a Revocable Living Trust?
A question we get every day at our firm is, “What is the difference between a will and a trust?” There are many different types of trusts, and a discussion of all the different types would be lengthy. A client could be talking about revocable trusts, irrevocable trusts, asset protection trusts, special needs trusts, testamentary trusts, etc. However, in our experience, most people are asking about what is technically referred to as a “revocable living trust.”
To understand what a revocable living trust is, let's break down the term. Revocable means that the trust can typically be changed, amended, or totally revoked during the lifetime of the person(s) who created the trust. This means that the creator of the trust has maximum flexibility to do what they want. Living means that the trust is established during the lifetime of the creator. Finally, a trust is a separate legal entity that can own property and is controlled by a trustee.
Therefore, a “revocable living trust” is a separate entity created during the lifetime of the creator that can be changed, amended, or revoked while the creator is still living. A single person can create a revocable living trust or a married couple can create a joint revocable living trust. Technically, any two persons (married or not) can create a joint revocable living trust, but unmarried parties creating such a trust would have to discuss any special considerations when doing so. For more information on this topic, please see our page “Estate Planning for Non-Traditional Families.”
How Does a Revocable Living Trust Avoid Probate?
One of the main reasons that a revocable trust is created is for probate avoidance. If a person passes away and still has assets or property titled into their own name, it becomes necessary to involve the probate court, because these assets are “stuck” in that deceased person's name. A revocable living trust can be created in order to totally bypass the probate court process and ensure that nothing is still titled in your name after you die. If you set up a revocable trust and correctly title assets in the name of that revocable living trust, those assets won't still be owned by you after you die. Instead, the assets will be owned by the trust upon your death.
To give a simple example, imagine a single man who owns a home, a car, and a bank account. All three assets are titled into his name only. Tomorrow he passes away. The day after his death, all three assets are still titled into his name. At this point, a dead man owns a home, a car, and a bank account. Another way to think about this is that these three assets are “stuck” in the name of this deceased man. The assets will stay stuck that way forever until someone with an interest in the assets (such as an heir or family member) comes forward and takes action with the probate court. During the probate process, the items will become “unstuck” from the name of the deceased and into the name(s) of the legal heirs.