A Revocable Living Trust (RLT) has become a very common tool used by families to avoid probate, and court proceedings.
A RLT is another legal entity which can own real estate. In most cases, once the trust is signed it is funded by transferring your real estate by deeding it, sometimes called grating it, to the trust. In some cases bank accounts can be changed into the trust name too.
For most families, their main asset is their personal residence, which is usually “quit claimed” to the trust. You and your spouse, if you have one, are the Grantor’s. You both will also be the Trustee’s, and while you are alive you are also the beneficiaries of the trust. Even though you don’t own the property, you continue to enjoy its use and have full control over the property in the trust. You can terminate or modify the trust, In other words you keep control of the assets in the trust.
A revocable trust allows your assets to go to your beneficiaries at your death according to your wishes without going through probate. Probate is a legal proceeding supervised by probate court. Probate is how assets are transferred from you to your beneficiaries after you die if the assets are not owned jointly, lack a beneficiary designation, and are not in a trust.
So now the trust owns your property, and when you die the trust still owns the property, only the beneficiary changes. Your assets now go to your beneficiaries avoiding probate and the court. Your chosen successor trustee will now distribute your property according to the instructions you prescribed in the trust.
Your property can be left in whatever manner you chose, or held in the trust for as long as you want and then distributed to the beneficiaries at a later date.
A funded revocable trust can be an enormous help by providing that a successor trustee will step in to administer the trust in the event the grantor is incapacitated. You receive the assistance you need without the expense and delay of court proceedings. A durable power of attorney and patient advocate or health care surrogate are also useful in cases of incapacity.
Revocable trusts are not perfect. For example, they are not useful as an asset-protection vehicle. Before signing a revocable trust, obtain competent legal advice. Above all, be proactive and plan.