What is a Revocable Living Trust?

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An RLT stands for Revocable Living Trust.  An RLT is a list of instructions that you create for a person to follow (executor or trustee) if you have become incapacitated or you pass away.  This document is a signed and notarized legal document that serves as a list of instructions when someone dies or is incapacitated or in the hospital and is not able to handle their affairs.  A lot of people fail to realize that an RLT has the incapacitated component to it.  Actually, many people often think a Revocable Living Trust is only for death and they don’t have to be concerned with it. However, incapacitation can happen at any time, and that’s why it is important to have it in place.  The Revocable Living Trust ensures who will take care of you and who will take care of your loved ones.

There are several things to think about with a Revocable Living Trust.  Probate is one of those key issues.  If you just have a general will that’s not bad but your family will still have to go through a probate, and a judge will decide the way your estate will be handled. So the way you list things in your Will is the way it is going to be.  The judge oversees the probate process, meaning the judge will be given all the information; the will, the beneficiaries, etc…and will take what the Will states and distribute that appropriately and based on his or her understanding.  This is done to eliminate conflict among the family members in which the probate is being settled.  However, if you have an RLT, you bypass the trouble of a probate.  It will be done without court supervision and it is much easier and cheaper to deal with.

In California, you should have a RLT if you own a home and/or $125,000 assets (in bank or investment accounts) and do not have a RLT, you will be placed in the probate arena. So to avoid probate, it’s very important to think about the benefits of having a Revocable Living Trust.

Another big reason why people get a RLT is for control.  People want to be in charge of their assets and all other things to be passed down and whom it belongs to.  The RLT also specifies what the trust maker wants to give to his/her beneficiaries and trustees or kids to make sure that the kids grow up in an environment similar to how they would have experienced if the parent or trust maker was around.  Sometimes, you have a sudden death, and there are no instructions.  If you have an RLT, the instructions within it tell you exactly what to do.

The instructions within the RLT do not have to follow any specific rules or regulations. You can just give out the money, or put restrictions on the inheritance that allows for access to, etc, etc…This is good because if an 18 year old were given $200,000 and there are restrictions on it, you will have the peace of mind that the money will be used for proper purposes such as college and not a brand new Ferrari.

There is also a named trustee in the RLT that is in charge of the beneficiaries and work with the restrictions.  It is an honor to be named the trustee for an estate, but you also incur some major responsibilities.  You now become situated in the proverbial legal hot seat with everyone looking to you and coming to you for information and money.


Revocable Living Trust


Kevin, is the lead assistant in the Estate Planning Department and Wealth Strategies Department.  Kevin has been with the firm for over 5 years and is a major contributor to the departmental cases.

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