How does a revocable living trust work?
A Revocable Living Trust is quite easy to establish and operate. To create a basic living trust, you make a document called a declaration of trust, which is similar to a Last Will and Testament. You then name yourself as trustee and transfer whatever assets or property you want into that trust. Because you are named as the trustee, you maintain full control over your assets just as you did before you transferred them. You can still do whatever you wish to with them – manage them, sell them, or even give them away. The trust does not become effective until you die or become incapacitated. After you, or you and your spouse (in the case of a joint trust) pass away, the trust identifies the person who will act as successor trustee. The successor trustee — the person you appoint to handle the trust after your death — simply transfers ownership of the assets in the trust to the beneficiaries named in the trust. In many cases, the whole process takes only a few weeks, and there are no lawye
A trust avoids probate by putting the estate in the name of the trust before the owner dies. It works like a bridge over the chasm of intestacy, allowing your beneficiaries to access your estate without going through the courts. With the assets in the name of the trust, passing them on is as simple as transferring ownership from the trust to the beneficiary. If a trust is set up by a husband and wife, both spouses can be primary trustees. This way, if one of them dies, the remaining spouse gets full control of the assets for the rest of his or her life. After both spouses pass away, a successor trustee appointed in the trust will manage all the assets as stated by the primary trustees.
With a revocable living trust, the trustee, who could be yourself, is able to buy and sell assets. It is important to know that you can revoke the trust at any time if you choose. Nothing really changes except the title as trustee. During any period of incapacity, the co-trustee or successor trustee takes control of the assets until you recover. If you pass away, the assets remain in control of the surviving trustee. The surviving trustee could be your spouse, a bank, or other person.
