A revocable living trust is a written document which creates a separate legal entity. You appoint yourself as trustee of your trust (the manager of the trust). If you are married, your spouse may be a co-trustee. You are the life beneficiary of the trust (the person who enjoys the use of the properties of the trust). Most of your assets will be retitled in the name of your living trust.
As trustee of your own trust, you have 100 percent control over your assets: you can sell assets, buy assets, add assets to the trust, and remove assets from the trust. Since the trust is revocable, you can amend, alter, or revoke your trust at any time.
With a living trust you avoid the costs, time delays, public nature and other difficulties of having your estate go through court supervised probate.
In your living trust document, you name one or more individuals to serve as successor (or backup) trustees should you die or become unable to serve as the trustee. A successor trustee can be one of your adult children or a close friend, a relative, or a trust company or bank trust department or anyone you designate.
Your trust includes instructions specifying that upon your death or upon the death of your surviving spouse, your children or other loved ones will become the remainder beneficiaries (the persons who enjoy the remaining property in the trust).
Your trust agreement may also include your instructions on how to distribute the remaining property to those beneficiaries. For example, you may designate that your remainder beneficiaries must attain a certain age or level of maturity before receiving the property.
You may instruct the trustee to distribute the trust property to the beneficiaries outright or in increments.
If any of your children are too young to receive their distributions, the successor trustee will manage their shares for their health, support, maintenance, and education until they attain the age you designated. At that time, the trustee may distribute their share.
You need to keep your revocable living trust funded. This means that all your assets (except tax deferred accounts such as IRA’s, etc.) should be titled in the name of your trust.
Often individuals will set up a trust, but not remember to place newly acquired assets in the trust’s name. If assets are not held in the trust’s name, they will be subject to probate. Review the titles on all your assets and make sure they show the trust as the owner.