A Revocable Living Trust, if properly drafted and funded, accomplishes the following:
- 1) establishes a plan for the management and care of the trust estate upon the death or incapacity of the trustor,
- 2) avoids probate, and
- 3) minimizes estate tax exposure.
Most importantly, the Trust is revocable during the Trustor’s lifetime, which means that the Trustor retains the right to make changes to the Trust. As a result, the Trust is more or less “invisible” during the Trustor’s lifetime. Since the Trustor also typically serves as Trustee, the Trustor is able to continue managing the assets in his or her capacity as Trustee and continues to use the assets in the same manner as if the assets were held outside of the Trust. It is not until the Trustor passes away that the Trust becomes irrevocable and the plan for administration of the trust estate is put into play. Since a Trust is a legal entity, the Trust continues on after the death of the Trustor, therefore avoiding the necessity of probate. Upon the death of the Trustor, a Successor Trustee (previously appointed by the Trustor) takes over as Trustee and manages the Trust while administering the Trust according to the Terms of the Trust, as previously set forth by the Trustor.
If you are interested in learning more about a living trust or any other estate planning strategies, please contact us to schedule a complimentary consultation at (714) 581-8808.