The Living Trust Revocable
Definition of a trust
Trusts own property instead of people. A person called a “Trustee” legally owns the property. And the Trustee manages the property. However, a person called a “Beneficiary” receives the economic benefit of the property. But, the Trustee owes the beneficiary legal duties. For example, the first duty is loyalty. Similarly, the second duty is honesty. And, the Trustee must account to the beneficiaries.
creating a trust
Trusts and estate planning
Estate planning uses two types of trusts. First, an inter-vivos (living) trust. Second, a testamentary trust (created by a will). Living trusts avoid probate. Testamentary trusts require probate. Therefore, I do not recommend testamentary trusts. They defeat what I am trying to accomplish. People terminate revocable trusts. They also amend them. On the other hand, people create irrevocable trusts too. The average person needs a revocable trust. With a revocable trust nothing changes while you are alive. But, the trust becomes permanent after you die.
Trusts are flexible. They do many things. First they provide incomes. Second they distribute outright. Third they provide gradual distributions. For example, a common way of planning for minor children is to allow them to receive interest income over a fifteen year period. And, when the children reach adulthood the assets are distributed by one third every five years. This plan assures a steady stream of income. In addition, it provides lump sums at critical ages of development.
In conclusion, this page is only intended to give a thumbnail description of trust information. But, for more in depth information see the following: Understanding Living Trusts