"What is a Revocable Living Trust?" is a common question among clients.This brief video blog talks about the vantages and disadvantages of having a Revocable Living Trust.
What is a Revocable Living Trust? This video blog addresses a Revocable Living Trust, which is a specific type of trust. For an explanation of trusts more generally, please view our companion video number CLF107 titled “What is a Trust?”.
A Revocable Living Trust is a type of trust in which the Settlor personally retains the power to amend, or “revoke,” any part of the trust agreement that governs how the trust is managed so long as the Settlor has the cognitive capacity to understand the changes he or she is making.
Changes can be minor or merely stylistic at one extreme, but may go all the way to revoking the entire trust and causing it to cease to exist at the other.
When a Settlor no longer has the cognitive capacity to make such decisions, or after a Settlor has died, then no other party may change the Revocable Living Trust terms and it effectively transforms into an irrevocable trust.
Because the Settlor is essentially free to change of the terms of the Revocable Living Trust while they are alive and well, these trusts have become a staple of estate planning in scenarios where a person wants to control all their money and property while they are alive and well, but still be able to determine how their money and property will be managed after they become incapacitated or pass away.
But it’s important to keep in mind that a “Revocable Living Trust” is a very generic term. All it means is that the trust, is created when the Settlor alive, and the Settlor retains the power to change or “revoke” the trust terms so long as they are not incapacitated.
So if someone says they have a “Revocable Living Trust,” the term itself says absolutely nothing about how the trust functions or whether there may be a differently drafted Revocable Living Trust structure that is better for their goals.
For context, a Revocable Living Trust can range from 2 pages to hundreds of pages - and they often do. There is, in fact, an entire class of lawyers, called estate and trust litigators, whose entire practice is devoted to representing parties with poorly drafted trusts suing each other. I caution everyone not to draft their own trust or download a template from the internet and risk inviting estate litigation among their loved ones.
To watch more from our video blog click here. To understand better if you should have a Trust also check our videos "What is a Trust?" and "Does a Living Trust avoid probate?". If you want to understand more about Irrevocable Trust and its advantages click here.
Watching any of our video blogs creates no attorney-client relationship. We are Estate Planning Lawyers and Tax Lawyers who also practice Elder Law.