There are many different types of trusts with different purposes, each accomplishing a variety of goals. A revocable living trust is one type of trust often used in an estate plan. By transferring assets to a revocable trust, you can provide for continued management of your financial affairs during your lifetime (when you’re incapacitated, for example), at your death, and even for generations to come. If married, your revocable living trust can provide substantial estate tax savings for both state and federal estate tax purposes.
Every revocable trust has three important components. The donor (or grantor) generally you – creates the trust and transfers assets to it either during life or upon your death. The beneficiaries, often you and your spouse during life, and your spouse and children upon death, receive the income and/or principal according to your trust’s terms. The third component, a trustee, who could be you during life, a family member, or a corporate trustee, manages the trust assets.
You can change a revocable trust’s provisions at any time during your life. If you act as your own trustee, you continue to manage your investments and financial affairs. In this case, your account might be titled “(Your Name), Trustee of the (Your Name) Revocable Living Trust Dated (Date).” Because this legal entity exists beyond your death, property titled to the trust before your death does not need to pass through probate.