From irrevocable trusts to a testamentary trust or inter vivos trust, people have a number of options when it comes to putting together a trust. In Woodland Hills, California, some people who want to ensure the proper distribution of assets opt for a revocable living trust. While revocable living trusts are quite popular, it is important for people to understand the details of this arrangement and how it will fit into their estate plan.
The Consumer Financial Protection Bureau covers revocable living trusts on their website. For those who are thinking about setting up a revocable trust, it is important to understand the different roles and responsibilities people have with these trusts. First, there is the settlor (also known as the trustor or grantor), the individual who creates the trust. Next, there is the trustee, the individual (or financial institution) responsible for making decisions regarding a trust’s property. Sometimes, co-trustees and successor trustees are also named. Finally, there are beneficiaries, the individual(s) who receive the property from a trust.
According to the Minnesota Attorney General’s Office, with revocable living trusts a settlor can modify their trust while they are still alive. Typically, trustees will give their income to the settlor until the settlor passes away, at which point the assets will be distributed to beneficiaries. With revocable trusts, people can avoid probate, a process which is sometimes time-consuming, costly and stressful. Since revocable living trusts don’t protect assets from state or federal taxes or reduce tax liability, they are seen as tax-neutral.