What Is A Revocable Trust?
A revocable trust (often called a living trust or probate avoidance trust) is the most commonly used type of trust in estate planning; it should be distinguished from irrevocable trusts which are used rarely. The most important difference between these trusts is that revocable trusts can be changed. Irrevocable trusts, in general, cannot be changed. Revocability also allows for the termination of a trust. In most circumstances, the grantor of the trust, the person that creates the trust, can change or terminate a revocable trust.
In many instances people use revocable trusts for probate avoidance. Property and assets that are transferred to trusts do not need to be probated. Instead, the trust instructs how the property and assets are to be distributed. Although property in a trust bypass probate, it is important to consider which assets are transferred to a trust. Typically, retirement accounts and life insurance policies should not be owned by trusts because they bypass probate, if beneficiary designations are properly used.
Many people want to know if transferring property to a revocable trust will affect their ability to use the property. Most people will notice no change in managing property once it is transferred to a revocable trust, except that some documents may need to be signed with the title of trustee.