Revocable living trusts are a legal contract that create a trust, typically you as the person forming the trust (granter, settlor or trust or) and yourself as a trustee (and often another person or institution as a co-trustee). A revocable trust is "revocable" in that you can change, modify or "revoke" it at anytime. The benefit most often touted for revocable trusts (sometimes called living trusts or living trusts) is that they can be used to avoid "probate". Probate is the formal process to have a will admitted or recognized by court and to have your estate administered (collecting assets, paying expenses, and then distributing assets to beneficiaries). However, the real power of a revocable living trust is not the avoidance of probate. While probate avoidance can be a valued use there are many ways to minimize and avoid probate costs, living trusts don't always accomplish that goal, and in many cases probate is simply not a big deal!. Living trusts can be used to manage assets during disability and illness. If you have a chronic illness, or are aging, setting up a revocable trust, really transferring assets to it (funding) and creating a co-trustee or trustworthy successor trustees that take over if you cannot serve, is a technique that can assure your care and protection of your financial resources. Revocable living trusts can be used in other creative ways as well. For example, if you inherited assets and wish to assure that they don't become commingled (mixed) with marital assets so that they will have a greater likelihood of being protected in the event you divorce, you could establish a revocable trust solely to hold inherited assets. Segregating assets in this manner can be beneficial in that they are in a separate account, perhaps with a co-trustee along with yourself. There are other creative uses of revocable trusts as well. The key is to avoid the sales pitches of canned documents that only avoid the purported evils of probate and use a living trust as part of a comprehensive estate plan prepared by a qualified estate planner.
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