Aside from wills, you could use other estate planning tools to accomplish various objectives, such as revocable living trusts. This legal option allows you to put your assets in a trust, legally entrusting your assets to another party if you ever die or become incapacitated.
- Settlor or grantor: This person establishes the trust and owns its assets.
- Trustee: This position oversees or manages the trust, which a trusted individual or a qualified financial institution could do. Sometimes, multiple parties can take on this role, making them co-trustees. The settlor can designate a successor trustee as a substitute if the initially appointed party cannot accomplish their duties.
- Beneficiary: This role will receive the property or assets in the trust according to its terms and conditions. The legal right of being a beneficiary is effective while alive or if they named another party as co-beneficiary before death.
With a revocable living trust, most of the duties concerning the estate fall on the trustee. This role receives the authority over the trust and the property it contains. This person could make asset management and distribution decisions based on what is in the agreement.
Revocable living trusts can be flexible
Some might prefer this trust type because of how flexible it can be. Since it is revocable, you, as the settlor, can modify or terminate the trust whenever you want. This option only becomes irrevocable after you become incapacitated or die. Additionally, you may change role appointments at any point, such as naming a new trustee based on the circumstances.
Still, there are situations where other trust types could be more beneficial. Before establishing a revocable living trust, consult a lawyer or professional specializing in estate planning. Doing so can help determine what options have more advantageous features, potentially yielding more benefits for you and your beneficiaries.