A living revocable trust or "revocable living trust" is a special type of trust that is made while the trust creator is still living. It allows the trust create to revoke or cancel the trust according to their own desires and intentions. Generally speaking, the living trust document will contain the instructions regarding revocation of the trust, and when it can happen. For instance, the trust might state, "this trust is revocable at the discretion of the trust creation".
If the trust document doesn’t contain specific instructions, the trust can be revoked at any time, provided that the parties understand that it is a revocable trust. State laws may vary regarding the creation and management of a living revocable trust.
Why Make a Revocable Trust?
Revocable trusts are often selected for various reasons. These can include:
- The trust creator can foresee certain situations in which the trust might need to be revoked.
- Revocable living trusts allow both the trust creator and the other parties more flexibility and control over the assets.
- Some states have various tax advantages for revocable trusts.
- Revocable trusts can be helpful for avoiding probate issues.
Revocable trusts can also be changed or amended, not just fully revoked. This makes them useful if adjustments or changes need to be made in the long run. This is not the same for irrevocable trusts, which can’t be changed once they are issued.
What Are Some Disadvantages of Living Revocable Trusts?
One disadvantage of a living revocable trust is that it doesn’t cover the person’s entire estate. It only covers those items and assets that are specifically listed in the trust. Thus, if the person wanted to manage or convey a greater part of their estate, or their whole estate, a different type of document might be needed (such as a will).
Another disadvantage is that living trusts don’t authorize persons to act fully on the trust creator’s behalf. For those types of responsibilities, the trust creator may need to appoint a power of attorney for other decisions. Also, living revocable trusts often interact with other estate and financial planning documents, and such interactions need to be carefully considered beforehand.
Should I Hire a Lawyer for Help with a Living Revocable Trust?
Creating any type of trust document can be a major endeavor, and it usually requires the assistance and guidance of a lawyer. You may need to hire an estate attorney for help creating and executing a living trust. Your attorney can help you with the process and can ensure that your document is valid under state laws. Also, your lawyer can represent you if you need to file a lawsuit in court.