A Revocable
Trust is a popular vehicle for titling
and management of one’s assets
during lifetime, in the event of disability
and upon death. The primary purpose
of this type of trust is to establish
a structure to manage assets for its
intended beneficiaries. It typically
contains provisions for who should
manage one’s financial affairs
in the event of disability; who should
administer the trust estate upon death;
and how the trust estate should be
divided and distributed after death.
A Revocable Trust (also known as a “Living
Trust” or “Inter Vivos
Trust”) as the name suggests,
is revocable or amendable during lifetime.
The parties that are involved in the
trust are:
- Grantor
(also known as “Trustor” or “Settlor”): The
individual(s) that creates trust. The
Grantor must transfer title of ownership
for each asset that will be placed
in the trust from his or her name
to that of the trust. This is often
referred to as “funding” the
trust.
- Trustee: The individual(s)
or corporation(s) that manage the
trust assets in accordance with
the provisions set forth in the
trust agreement for the benefit
of the beneficiary(s) of the trust. The
Trustee acts in a “fiduciary” capacity
which requires a high standard
of conduct and responsibility for
both the Grantor and the beneficiary(s).
- Successor Trustee(s): In the event
the initial Trustee is unable or
unwilling to act, then these named
individuals will take over the role
of managing the trust assets.
- Beneficiary(s):
Those individuals or charities
that the Grantor intends to benefit
from the trust
In most instances, the Grantor, initial
Trustee, and initial Beneficiary of
a Revocable Trust are the same person. As
both the Grantor and the Trustee, an
individual can maintain full control
of the trust until his or her death
or incapacity.
In order to determine
whether or not a Revocable Trust is
an appropriate vehicle for your estate
plan, consider some of its advantages
and disadvantages:
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