Revocable Living Trusts Explained
Key Points
A revocable living trust is the most common type of trust used in estate planning.
The person who creates the trust typically retains complete control over the trust during their lifetime.
A revocable trust may help avoid probate for trust-owned assets and provide continuity during incapacity.
A revocable trust does not automatically reduce taxes or protect assets from creditors.
A trust only controls assets that have been properly transferred into it.
Introduction
When people talk about "getting a trust," they are almost always referring to a revocable living trust. This is the most common type of trust used in estate planning because it allows the grantor to retain control while creating a framework for incapacity planning and the management of trust assets after death.
What Is a Revocable Living Trust?
A revocable living trust can generally be amended, restated, or revoked by the grantor during the grantor's lifetime. Its flexibility is one of the primary reasons it is widely used in estate planning.
Who Serves as Trustee?
In most revocable living trusts, the grantor serves as the initial trustee and continues managing trust assets.
The Successor Trustee
A successor trustee typically acts only if the grantor becomes incapacitated, resigns, or dies.
What Happens During Incapacity?
The successor trustee can often manage trust assets according to the trust agreement if the grantor becomes unable to do so.
What Happens After Death?
After the grantor's death, the successor trustee administers the trust according to its terms. Trust assets often avoid probate, allowing administration to proceed privately and efficiently when the trust has been properly funded.
Funding the Trust
Appropriate assets generally must be transferred into the trust. Assets not transferred may still require probate.
What a Revocable Living Trust Does Not Do
A revocable living trust generally does not protect assets from creditors, eliminate taxes, qualify someone for Medicaid, or replace every estate planning document.
Common Misconceptions
I lose control of my property.
Not necessarily. Most people who create a revocable living trust continue serving as their own trustee, allowing them to buy, sell, invest, refinance, and manage their property just as they did before creating the trust.
A revocable trust protects my assets from lawsuits.
Generally, no. Because you typically retain control of the assets in a revocable living trust, they generally remain available to your creditors just as they would if the assets were owned in your individual name.
Once I sign the trust, I'm finished.
No. Signing the trust is only the first step. To receive the intended benefits, appropriate assets must be properly transferred into the trust, and your estate plan should be reviewed periodically as your assets, family, and goals change.
Everything I own automatically goes into my trust.
No. A trust generally controls only assets that have been properly transferred into it or otherwise coordinated with it. Assets that are never funded into the trust may still require probate or pass according to other legal rules.
Frequently Asked Questions
Can I change my revocable living trust?
Yes. One of the primary advantages of a revocable living trust is its flexibility. As long as you remain legally competent, you can generally amend, restate, or revoke the trust whenever your circumstances or wishes change.
Can I remove property from my trust?
Generally, yes. Because a revocable living trust remains under your control during your lifetime, you can usually transfer assets into or out of the trust as needed, provided the appropriate documents are completed.
Do I still need a will?
Usually, yes. Most revocable living trust plans include a pour-over will, which helps ensure that assets not transferred to the trust during your lifetime are directed into the trust through the probate process if necessary. A will may also nominate guardians for minor children.
Does everyone benefit from a revocable living trust?
Not necessarily. A revocable living trust is an excellent planning tool for many individuals and families, but it is not the right choice for everyone. Whether a trust makes sense depends on your assets, family circumstances, estate planning goals, and the overall complexity of your situation.
Your Next Step
A revocable living trust is the estate planning tool most people picture when they think about trusts—but it is only one type of trust. Understanding what a revocable trust can do also means understanding what it cannot do.
In the next article, you'll learn how irrevocable trusts differ from revocable living trusts, why giving up some control can create different legal and financial consequences, and the specialized planning goals irrevocable trusts are designed to accomplish. Knowing the distinction will help you better understand which type of trust, if any, may be appropriate for your circumstances.
Trust Foundations Navigation
Start Here – Trust Foundations
Article 3 — Revocable Living Trusts Explained
About Jarrod Barron Law
Jarrod Barron Law helps Michigan individuals, families, and business owners make informed legal decisions through thoughtful, plain-English estate planning.
Disclaimer
This article is provided for general educational purposes only. It is not legal advice and does not create an attorney-client relationship.