Living Trusts—Revocable & Irrevocable
The main thing to remember about a living trust is that it goes into effect while you are alive. Often, living trusts help you during your life and then gives away the property after your death. The main reason for this is to avoid the probate process, which can be expensive and take a lot of time. Although most people set up living trusts to benefit their families, you can name anyone as a beneficiary, including yourself. For example:
- You can put an investment account that brings income into a trust and name yourself as beneficiary while you are alive and then, after you die, have the income go to your spouse, children, and/or other relative, friend, or charity, until the trust ends and the assets are distributed.
- If you have an illness that is likely to disable you, you can establish a living trust and put the title to your assets into the trust for your benefit, naming yourself as trustee and someone to replace you as trustee when and if you become too sick to continue.
In each of these examples, after your death, use of the property or receipt of income from the trust passes to one or more beneficiaries without the need for probate.
When you create a living trust, you must place the asset into the trust once the trust document is signed. For instance:
- If the asset is a house, you must execute a new deed giving it to the trust.
- If the asset is a car, you must transfer the title to the trust.
- If the asset is a bank account, you must transfer the funds to a new bank account in the name of the trust.
Revocable Living Trust
The creator of a living trust decides whether it can be changed or revoked. If you include a paragraph in the trust that says it can be changed or revoked, then it is called a “revocable living trust.” In that case, you can easily change or revoke your trust.
Irrevocable Living Trust
You may include a statement in the trust that it cannot be amended and revoked. This makes it an irrevocable living trust. However, the law allows even irrevocable trusts to be amended or revoked under certain circumstances.
Legal Editor: Jill A. Kupferberg, March 2015 (updated March 2016)
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.