What is a Revocable Living Trust?

A revocable living trust is a legal document that allows an individual to manage and protect their assets while they’re alive and distribute them after their death, according to their wishes. The term “revocable” indicates that the trust can be altered or completely dissolved by the trust creator (grantor) at any point during their lifetime, as long as they are mentally competent. This flexibility is a key feature, offering the grantor the ability to adapt the trust to changing circumstances or desires.

At its core, the trust involves three parties: the grantor, who creates the trust and transfers assets into it; the trustee, who manages the trust’s assets; and the beneficiaries, who receive the assets according to the trust’s terms. Initially, the grantor often serves as the trustee, maintaining control over the assets in the trust. Upon the grantor’s incapacitation or death, a successor trustee, previously chosen by the grantor, steps in to manage or distribute the trust’s assets to the beneficiaries.

One of the primary benefits of a revocable living trust is the avoidance of probate, the legal process through which a deceased person’s assets are distributed under court supervision. Since the assets within a trust are technically no longer in the grantor’s direct ownership (having been transferred to the trust), they can bypass probate, facilitating a faster, more private, and often less expensive transfer of assets to beneficiaries.

Moreover, a revocable living trust offers a degree of privacy not available through a will, as it does not become a public document at the grantor’s death. This privacy can be especially valuable for individuals who wish to keep the details of their estate distribution confidential.

Another advantage is the potential for easier management of assets should the grantor become incapacitated. With a revocable living trust, the successor trustee can seamlessly take over the management of the trust’s assets, ensuring that the grantor’s financial affairs continue to be handled according to their wishes without the need for court-appointed guardianship or conservatorship.

Creating a revocable living trust involves drafting the trust document, which specifies the trust’s terms, and formally transferring assets into the trust. While the process can be more complex and costly upfront compared to creating a will, the benefits of avoiding probate, maintaining privacy, and ensuring smooth management and transfer of assets often outweigh these initial drawbacks.

In conclusion, a revocable living trust is a flexible, private, and efficient estate planning tool that allows individuals to manage their assets during their lifetime and secure their distribution after death, all while retaining the ability to make changes as needed.

Independent Trust Company is licensed and headquartered in South Dakota helping families throughout the United States access and benefit from the numerous advantages of South Dakota trusts.