A revocable living trust, also known as a living trust or inter vivos trust, is a legal document that allows an individual to transfer their assets into a trust while they are still alive. The person who creates the trust, often referred to as the grantor or settlor, can change or revoke the trust at any time during their lifetime.
The term “revocable” means that the trust can be changed or terminated by the settlor at any time without the need for court intervention. This flexibility is one of the main benefits of a revocable living trust agreement as it allows the settlor to modify the trust as their circumstances change.
The primary purpose of a revocable living trust agreement is to avoid probate. Probate is a legal process that occurs after someone dies. It involves validating a will, paying any outstanding debts, and distributing assets to heirs. Probate can be time-consuming, costly, and public, which is why many people choose to set up a living trust.
When assets are transferred into a revocable living trust, they are no longer considered part of the grantor`s estate for probate purposes. Instead, they are owned by the trust and managed by the trustee. When the grantor dies, the assets are distributed according to the instructions in the trust agreement, avoiding the need for probate.
Another advantage of a revocable living trust agreement is privacy. Unlike a will, which becomes a matter of public record during probate, a trust agreement is a private document that is not subject to public scrutiny. This can be beneficial for people who want to keep their financial affairs private.
In addition to avoiding probate and maintaining privacy, a revocable living trust can provide other benefits, such as asset protection and tax planning. However, it`s important to note that a living trust is not a one-size-fits-all solution. It`s important to consult with an attorney experienced in estate planning to determine if a revocable living trust agreement is right for you.
In summary, a revocable living trust agreement is a legal document that allows an individual to transfer their assets into a trust while they are still alive. The trust can be changed or revoked at any time during the grantor`s lifetime, providing flexibility and control. The primary purpose of a living trust is to avoid probate, but it can also provide privacy, asset protection, and tax benefits. If you`re interested in setting up a living trust, it`s important to consult with an experienced estate planning attorney.