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Comprehension of Revocable Trusts
A revocable trust is a vital element in estate planning, providing control and protection as the grantor ages. The trust is adaptable, altering or revoking as per the grantor’s preferences while managing estate taxes. Following the trust’s instructions, the trustee, or asset holder, distributes assets to beneficiaries or maintains control. The trust remains confidential and becomes irrevocable upon the grantor’s demise.
Qualities of a Revocable Trust
The funds or property retained by the trustee for a different individual’s benefit is the principal of the trust. The principal modifies frequently due to the expenses of the trustee or the investment’s valuation or devaluation. The shared assets are included in the trust fund. The person or persons that benefit from the trust are the beneficiaries. Since a revocable trust lists one or other beneficiaries, the trust bypasses probate.
Revocable Trust Advantages
Key Revocable Trust Takeaways
- Trusts are devised by individuals (grantors) and their lawyers to establish how their assets will be administered by trustees and eventually transferred to beneficiaries, following their passing.
- Revocable trusts allow the living grantor to modify instructions, withdraw assets, or discontinue the trust.
- Irrevocable trusts can’t be modified; assets established inside them can’t be withdrawn by anyone for any reason.
- Revocable trusts enable beneficiaries to bypass probate court and guardianship or conservatorship processes; they also enable documents to remain private.
- There are drawbacks though, revocable trusts have upfront costs that are high, involve a lot of steps to fund them, don’t exonerate you from requiring to make a standard will also, and allows your heirs longer periods of time to challenge a trust.
Source:
- Kagan, Julia. “Revocable Trust.” Investopedia, Investopedia, 5 Apr. 2020, www.investopedia.com/terms/r/revocabletrust.asp.
