What Is a Revocable Trust | Minnesota Law

by Flanders Law Firm LLC on January 5, 2018

What is a revocable trustWhat is a revocable trust?

When most people think about estate planning, their first thought likely involves creation of a will. Others may realize the importance of a living will/healthcare power of attorney or even a financial power of attorney.

Once the bare minimums have been accounted for, its rare for most people to think any further. Thats unfortunate, because there are a wide array of estate planning tools that exist and could be used to the benefit of a large number of people. Many people are simply unaware of their existence and end up missing out on potentially important tools that can be used to save time and money.

A revocable trust is one such example. Revocable trusts are referred to in a number of different ways, which can make discussions surrounding their use confusing. Revocable trusts are also known as revocable living trusts, living trusts, inter vivos trusts, and loving trusts. Each refers to the same basic estate planning tool. For the sake of argument, well go with revocable trust.

So what is a revocable trust?

A revocable trust is a trust that is created during a persons life (hence the name living trust). The trust is then used to help manage your assets, allowing you access to the items, while offering some protection. These kinds of trusts are helpful if you become sick or disabled as they allow for someone else to manage your assets while you are still alive. They can also allow for the distribution of assets once you have passed away. Though revocable trusts do many wonderful things, they do not help in avoiding estate taxes. The reason is that they are revocable, meaning the person who created the trust still has access to the underlying assets contained in the trust. For this reason, estate taxes still apply. That said, revocable trusts are helpful in allowing assets contained within the trust to avoid the probate process.

How does it function?

A revocable trust is created during a person’s lifetime and requires placing assets, whatever you choose, inside a trust. The trust is then overseen by a trustee who manages the property contained in the trust. While you are alive you are able to manage the trust yourself, appointing yourself trustee, though this isn’t required. You can also appoint a co-trustee to share the administrative burden and benefit from someone else to manage your affairs in the event of your incapacity. After you’ve passed away, the trustee is usually required to either distribute the assets of the trust according to your wishes or, if you choose to keep the trust up and running, to manage the assets on behalf of your beneficiaries.

How is it revocable?

Revocable trusts mean just that, they can be revoked by the person who initially created the trust at any time and for any reason. This is one of the reasons revocable trusts are popular. As opposed to irrevocable trusts, which cannot be undone once established, you always have the ability to change your mind with revocable trusts. If your plans change, if your family grows or shrinks, you can amend your trust while you are still alive to reflect these new realities.

Minnesota Living Trust Lawyer

An experienced Minnesota estate-planning lawyer can help walk you through the probate process, answering questions along the way. For more information on estate planning in Minnesota, along with a variety of other topics, contact Joseph M. Flanders of Flanders Law Firm at (612) 424-0398.

Source: “Revocable Trusts,” published at AmericanBar.org.

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