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Here’s information about how revocable living trusts work and how to establish one.
Like all trusts, a revocable living trust is a legal entity. A living trust is called living because you create it while you’re alive, as opposed to a trust that’s created at your death under the terms of your will.
Living trusts are called revocable because you can change the terms or cancel it at any time during your lifetime, as long as you’re mentally competent. The terms of the trust only become irrevocable at your death.
To establish a living trust you create a legal document in which you name a trustee to manage your trust assets. As the creator of the living trust you’re called the grantor.
To maintain full control of your property you typically name yourself as trustee, or you and your spouse as co-trustees. You can instead, however, name a trusted friend, relative, financial advisor, or institution trust department.
You also name a successor trustee, and sometimes an alternate successor trustee, to distribute your trust property when you die or to manage your trust assets for your benefit in the event you become incapacitated. You then name the trust beneficiaries who receive your property when you die.
Next, you transfer ownership of some or all of your property into the trustee’s name. This includes preparing a new deed for the transfer of real estate, changing the title on savings accounts, and retitling investments. This so-called funding of your trust is an essential step in making a living trust effective because any property left in your own name passes through probate.
Typically, a revocable living trust provides that you receive all the benefits of the trust assets during your lifetime, including the right to trust income and the right to sell, spend, or gift trust assets as you choose.
If you move to a different state after establishing a revocable living trust, it remains legal since living trusts are valid in every state. However, check with an attorney to see if your living trust should be revised to conform to differences in the law of your new state.
Because property held in a living trust doesn’t need to pass through probate, the trustee or successor trustee transfers ownership of the trust property to the beneficiaries you named in the trust when you die. Once the property is transferred the trust ceases to exist.
Article is for educational purposes only and is not intended to provide specific tax or legal advice. For answers to tax questions, please see your tax professional. For legal questions, consult an attorney.
Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free (800) 369-2862. Nondeposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America. The Representative may also be a credit union employee that accepts deposits on behalf of the financial institution.
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