An increased interest in estate investing has resulted in a rise in demand for revocable living trusts. Maybe you’ve heard of them, but maybe you’re fuzzy on all the details. Well here are the facts. While you’re still alive, you make a revocable living trust and whenever you pass away, you can immediately cancel it and transfer the ownership to someone else. Once you die, however, your family is generally required to liquidate the trust because it does not fulfill the necessary requirements under the law.
In addition to owning property within the trust, you also hold an interest in the assets of the trust. When someone makes a gift to one of the beneficiaries, they become the trustee or beneficiary of the revocable living trust. The value of the trust is the amount of money that the beneficiary, or trustee, receive upon the death of the person who made the gift. In other words, the trust provides an asset that can be passed on to the intended recipient of the gift.
The concept behind revocable trusts is relatively simple. But the actual process of incorporating it can be extremely complex. First, you need to write a trust document containing the information about the individuals you want to name as co-trustees and the property you want divided among them. Next, you create an “asset trust.” This is where the actual assets of the trust are contained; you cannot place your home in the trust. Last, you record a last will and testament which serve as a legal basis for the entire estate plan.
When you add beneficiaries to your revocable trust, you must provide them with notice of their designation as co-trustees. Generally, this notice must appear in the same location as the will. However, if the names of the people being named in the trust are different from the names of the beneficiaries, you may include the notice in the master register of the estate. Once the designation has been made, all of the decisions made by the trustee or the revocable trustor will be trustee or revocable depending on the specific provisions in the trust document.
You can also use the living trust document itself to decide what is to be done with any personal belongings left over after the trust is established. For example, if you name a wife as co-trustee but leave her name out of the trust, she will still be considered a beneficiary. If you change the names of the husband and wife, then his name will be added to the trust. Similarly, the trust will determine the division of the couple’s joint assets, including their retirement accounts. These details should be carefully reviewed to ensure that the wife and husband do not have an unfair advantage over the other.
Another possible use for the living trust document is to name a specific beneficiary. If a death occurs before the trust is established, the court may name this person the executrix (the person who takes care of the deceased’s properties). If this person is not already a beneficiary, then the trust will be set up to create a new trust and pass on the assets to his or her relative. This can be done by revocable trusts or living trusts, depending on the situation. In either case, it is important to review the living trust document to make sure that it is not creating a situation where some of the beneficiaries are not actually entitled to their inheritance because the document did not specify who they should receive the assets.