DO YOU NEED A REVOCABLE TRUST?

A revocable trust is established by a trust agreement. The person who establishes a trust is called a “settlor.” The person or firm appointed to administer the trust is the “trustee.” Persons or entities which receive money or property from a trust are “beneficiaries.”

The settlor of a revocable trust typically retains the power to amend or revoke the trust agreement. When the settlor becomes incapacitated or dies, a revocable trust usually becomes irrevocable and may not be amended or revoked.

A principal advantage of a revocable trust is that it will avoid probate administration upon the settlor’s death with respect to assets titled in the trust.  The probate process is required when a person dies owning an asset titled solely in his or her name.  The law requires probate administration under these circumstances to give notice to heirs, to determine whether the decedent had a will, and to give an opportunity for creditors to be paid from the estate assets before they are distributed to heirs or distributees under the will.  Assets owned by a trust will not be titled in the settlor’s individual name at death and therefore will not require probate administration.  The trust will continue past the settlor’s death with instructions to the successor trustee concerning collection of assets, payment of bills and taxes, and distribution to beneficiaries as provided in the trust agreement.  In addition to avoiding probate administration, the trust provides a means to transfer management of assets in the event of the settlor’s incapacity because the successor trustee will have the ability and the responsibility to manage assets titled in the trust for the settlor’s benefit.