What is a Living or Revocable Trust?
Many people wonder what the difference is between a Living Trust and a Will. A Living Trust (also called revocable trusts or inter vivos trusts) allows you to put your assets in a trust while you’re still alive. People often choose to serve as their own trustee, but you can select an individual or a financial institution to manage your Living Trust. When you pass away, become incapacitated or resign as trustee, a successor trustee takes over and manages your property for you or for your beneficiaries. In contrast, a Will only takes effect at your death and spells out how you would want your property to be distributed. The most common claim by proponents of Living Trusts is that they avoid the probate process. That need is significantly reduced in Texas because our probate system is efficient and inexpensive if – and this is a big if – you have a properly written TEXAS-specific Will that allows for an “independent administration”. In many cases, it will cost you less to set up your Will
A Revocable Living Trust is a trust that is often viewed as a substitute for a will. This trust can be revoked by the settlor and may be funded or unfunded. According to a survey of the American Bar Association, over one-third of all estate plans utilize the revocable trust as one of the principal ingredients. In its simplest form, a revocable trust works like this: The settlor establishes the trust by entering into an agreement with the trustee, who can also be the settlor; During the settlor’s lifetime, the trust can be revoked at any time in whole or in part and can be amended at will up until death or incapacity of the settlor; Upon the settlor’s death, the trust must be administered and the assets distributed according to the trust’s terms. As the “main vehicle” of the settlor’s estate plan, the revocable trust will control the estate and all asset planning. To avoid circumventing the settlor’s plan, all assets should be tied to the trust, including assets owned individually or as
