A revocable trust, also known as a living trust, is a legal arrangement where the creator of the trust, or grantor, transfers assets to a trustee to hold for the benefit of one or more beneficiaries. The grantor of the trust can also serve as the trustee during their lifetime.
The main feature of a revocable trust is that the grantor retains the power to modify or revoke the trust at any time during their lifetime. This means that the assets placed in the trust are still under the control of the grantor, and they can add or remove assets as they see fit.
If the grantor of the trust becomes incapacitated or dies, the successor trustee takes over management of the assets in the trust and distributes them according to the instructions laid out in the trust document. This can help avoid probate, which can be time-consuming and expensive. For instance, a typical formal probate proceeding in Florida might start in the $8,000 to $10,000 range and increase from there based on a number of administrative factors.
Another advantage of a revocable trust is that it can help avoid probate in multiple states. For instance, if a grantor has real estate in more than one state, contributing the property to a revocable trust will often avoid having to conduct an expensive and time consuming probate in multiple jurisdictions.
Finally, a revocable trust is private. Unlike a will that must be deposited with the clerk of courts after death – which then becomes a public document -- a revocable trust is disclosed to the beneficiaries or representative of a beneficiary only. If a grantor is concerned about ensuring privacy of their estate plan, then a revocable trust may be preferrable over just having a will.
Overall, a revocable trust is a useful estate planning tool that can help manage and distribute assets while providing flexibility and control to the grantor of a trust.
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