Usually, the trust of a revocable living trust is also the trustee. The trustee is the person who is responsible for the administration of a trust, such as keeping a record of income and tax returns. One thing you will do in your trust documents is to name a successor trustee. A revocable trust is a part of estate planning that manages and protects the grantor's assets as the owner ages.
The trust can be modified or revoked as desired by the grantor and is included in estate taxes. Under the instructions of the trust, a trustee could be assigned to manage the assets or properties within the trust. The trustee is also responsible for distributing assets to beneficiaries. The trust remains private and becomes irrevocable after the grantor's death.
Legally, your trust now owns all of your assets, but you manage all assets as a trustee. The creator of a living trust decides if it can be changed or revoked. If you include a paragraph in the trust that says it can be changed or revoked, then it is called a “revocable living trust.”. In that case, you can easily change or revoke your trust.
You can include a statement in the trust stating that it cannot be modified or revoked. This makes it an irrevocable living trust. However, the law allows even irrevocable trusts to be modified or revoked in certain circumstances. A trust can be revocable, which means I can revoke it.
It also means that I can change it. So if I don't like the way I'm doing in life, I'll just change it. That is one of the beauties of this revocable trust. Other trusts are irrevocable, and there are some definite estate planning needs for an irrevocable trust, but we won't talk about that today.
Now my trust can also be established while I am alive and that is why it is called a living trust. Another type of trust is called a testamentary trust, that is the one that was established in my will and again we will save the testamentary trust for another day. With a revocable trust (or grantor's trust), the grantor owns ownership of the trust. Although an asset may have been renamed in the trust's name, the grantor must report any income or capital gains from the trust assets on its tax return and, if sued, creditors can go after ownership of the revocable trust.
If you are competent to handle your financial affairs now, there is no legal reason why you cannot be the trustee of your own trust. In fact, most revocable living trusts cause the people who created them to act as their own trustees. If you are married, you and your spouse can act as co-trustees. Your share can go to the trust without changing the interests of others.
There is no limitation as to where your trustees or beneficiaries should reside. As long as you are alive and competent, you can add assets or remove assets from your living trust without penalty at any time. In fact, all real estate must be transferred to your living trust. Otherwise, upon your death, there will be a legalization in every state in which you own real estate.
When you own your living trust, there is no probate anywhere. Again, the law firm will handle the writing work for you. Your living trust is valid in all 50 states, regardless of the state in which it was originally created. The main distinction between a revocable trust and an irrevocable trust is that the trustee technically still owns the assets in a revocable trust and manages those assets when acting as a trustee.
A revocable trust is a trust by which provisions can be modified or canceled depending on the grantor or originator of the trust. Assets held in an irrevocable living trust are not subject to estate tax, because the trust no longer owns them or has any control over them. A revocable trust is useful because it provides flexibility and income to the living grantor (also called a trust). Revocable and irrevocable trusts are intended to be used for different purposes and therefore each is best suited for those purposes.
If the grantor experiences health problems during the seniority process, a revocable trust allows the grantor's chosen manager to take control of the principal. A revocable living trust is often used in estate planning to avoid probate court and fights over assets of an estate. Unlike an irrevocable trust, the revocable living trust does not confer tax or credit protection. Now, the presenter will most likely tell you that he can solve all your estate planning needs with one thing, a revocable trust.
An irrevocable trust cannot be changed or altered once established, and the trust itself becomes a legal entity that owns the assets held in it. Moving assets to a trust can also reduce your tax liability, but that depends on the type of trust you open and whether or not you own the assets. When the grantor (trust) of a revocable trust dies, the trust automatically becomes an irrevocable trust. For example, John Doe, the grantor and the trustee, would make sure to change their accounts to be owned by John Doe, trustee of the John Doe Living Trust.
Once your current assets are transferred to your living trust, you take ownership of all new assets in the trust's name and they will automatically be owned by your trust. A revocable living trust allows you to maintain control over the assets you have placed in the trust, but there are certain circumstances in which an irrevocable living trust is the best option. . .