Living Trusts—Revocable and Irrevocable
The distinguishing characteristic of a living trust is that you create it, and it becomes effective during your lifetime and is often set up to benefit you during your life and to make disposition of property easier after you die—that is, to avoid probate.
Also, by naming yourself trustee of a living trust and naming yourself beneficiary during your life, you can retain complete control over the property in the trust during your lifetime—that is, you can amend or revoke the trust at any time. This kind of trust is called a revocable living trust. That means if you create a living trust and name yourself as trustee and deposit into the trust as principal:
- Stocks, bonds and other investments—you manage the portfolio; you can sell the stocks and bonds or buy new ones;
- A bank account—you can deposit money into and withdraw money from the account;
- A car—you can drive the car, sell the car, or even scrap the car;
- Jewelry—you can wear the jewelry, sell the jewelry or give it away.
Note that if you name someone other than yourself as trustee, that person becomes the manager of the trust, and you lose the ability to do what you please with the assets. That is, the trust becomes an irrevocable living trust, unless you have reserved the right to amend the trust, even if you are the beneficiary during your lifetime.
Who can benefit from my living trust other than me?
Anyone. While most people set up living trusts to benefit their families, you may name anyone a beneficiary, including yourself. If you name yourself as beneficiary, the trust is only useful if you leave the principal to another beneficiary after you die. For example:
- You can deposit an investment portfolio that generates income into a trust and name yourself as beneficiary while you are alive, and then after you die, the income goes to your wife and/or your children and/or a friend.
- You have a terminal illness. You establish a living trust and deposit the title to your antique car into the trust for your benefit until you die, then afterward, for the benefit of your best friend, and when he dies, for the benefit of his son.
In each of these examples, after your death, use of the property in or receipt of income from the trust passes to beneficiaries outside of the probate process. This saves time during the sometimes long probate proceeding.
Can I amend or revoke my living trust?
In New York, the creator of a living trust determines whether it can be amended or revoked. If you include a clause in the trust document that says it is revocable or amendable, then it is called a revocable living trust. Even without language permitting amendment or revocation, so as long as you are the trustee and the sole beneficiary during your life, you may amend or revoke your living trust at any time; you need not obtain anyone else’s consent to change or revoke any part or even all of the trust.
Are there circumstances in which I cannot amend or revoke my living trust?
Yes, you may include a statement in the trust document that the trust is not amendable and irrevocable. This makes your trust an irrevocable living trust. In addition, if you are not the sole beneficiary of your living trust during your life, and have named someone other than yourself as trustee, your trust is an irrevocable living trust. To amend or revoke a New York irrevocable living trust, you must obtain the written consent of all people who have a beneficial interest (i.e., all beneficiaries).
I want to create a revocable or irrevocable living trust:
- Determine who you want to provide for and for what needs you want to provide.
- Gather relevant documents about the property you would like to place in trust.
- Get in touch with an experienced estate and trust lawyer.
Changes may occur in this area of law. The information provided is brought to you as a public service with the help and assistance of volunteer legal editors, and is intended to help you better understand the law in general. It is not intended to be legal advice regarding your particular problem or to substitute for the advice of a lawyer.