Revocable Trust
What Is a Revocable Trust?
A revocable trust is a type of trust that allows the person who created it to modify, amend, or revoke the trust during their lifetime. The creator retains control over the trust’s assets and can change its terms as circumstances evolve.
Revocable trusts are commonly used in estate planning because they offer flexibility while still helping manage assets.
Why It Matters
Revocable trusts provide individuals with the ability to adjust their estate plans over time. Changes in family circumstances, financial conditions, or personal preferences can be reflected in updates to the trust.
Like many living trusts, revocable trusts may also help streamline the transfer of assets after death.
How a Revocable Trust Works
The trust creator transfers assets into the trust and typically serves as the initial trustee.
Key features include:
- the ability to modify trust terms
- continued control over trust assets
- the ability to revoke the trust entirely
After the creator’s death, the trust typically becomes irrevocable and assets are distributed according to its terms.
Example
An individual establishes a revocable trust to manage their estate. Over time, they update the trust to add new beneficiaries and assets as their circumstances change.
Revocable Trust vs Irrevocable Trust
- A revocable trust can be changed or canceled during the creator’s lifetime.
- An irrevocable trust generally cannot be modified once it is established.
FAQs About Revocable Trusts
Who controls a revocable trust?
The person who created the trust usually maintains control during their lifetime.
Can a revocable trust be canceled?
Yes. The creator can revoke the trust if desired.
Do revocable trusts provide asset protection?
They typically offer less asset protection than irrevocable trusts.
Related Terms
