What is a Revocable Living Trust?

There are many types of living trusts that serve many different purposes. A revocable living trust is the most common by far and is frequently used by the average middle-income American family to pass their assets to their beneficiaries. The revocable living trust is very similar to a Will in that it designates who receives an inheritance, but through a living trust, beneficiaries avoid a potentially timely and expensive court process known as probate. A standard Will takes effect upon death, but a living trust goes into effect immediately upon creation while the owner of the trust is alive.

As time marches on, we know things change. What we want today may not be what we want tomorrow. Things we need today may not be needed in the future, or something may arise in the future that causes a desire for change. The ability to change with the times is very important, and that is the very purpose of “revocable” in a revocable living trust. Revocable simply means “changeable”. A revocable living trust can be changed by the owner as often as they want and in any manner, they wish during their lifetime.

The ability to change a revocable living trust is virtually limitless. Provisions can be changed for new grandchildren as an example. If a beneficiary does not send a birthday card, they can be cut out of the inheritance. Literally, there are no limits to the type and amount of changes that can be made to a revocable living trust during the lifetime of the owner.

If you are interested in learning more about Living Trusts, join our free online presentation here. 

It is also very easy to change a revocable living trust. An “Amendment” is the formal name of the document used to make changes. It is usually just a one-page document or can be a few pages if there are multiple changes. An attorney will typically draw up the amendment reflecting the changes desired. Once signed, the amendment is stored with the original revocable living trust. Over time additional amendments can be added, again with no restriction as to the number of amendments. With a married couple, at the death of the first spouse, the surviving spouse can continue to make changes unless both spouses agree not to have this ability, which is common with blended families who have children from previous marriages.

It is also important to note that after the death of the owner (if married, after the death of the 2^nd spouse), the living trust reverts and becomes irrevocable; and this is a good thing for two main reasons. Since the trust becomes irrevocable no one can change it after death. This gives families peace of mind that beneficiaries cannot fight over their inheritance and that the assets will be distributed exactly the way the owner intended them to be.

If you have an existing Revocable Living Trust or would like to create a new Trust, we can facilitate the process, It’s what we do!