A Living Trust, also known as a Revocable Trust, is a legal agreement created by a person, known as the Grantor, to hold some portion of their assets during their lifetime. The Trust provides for payment of income to the Grantor and the distribution of the remaining Trust assets once the Grantor dies. The person in charge of managing the Trust is known as the Trustee. The Trustee can be the Grantor themselves, a bank, or some other third party that the Grantor feels confident will be able to responsibly manage the assets of the Trust. Most Trusts provide that the Grantor will serve as the initial Trustee to manage the assets of the Trust until the Grantor becomes disabled, would prefer to have another party manage their affairs, or dies. At this time, a new individual, known as the successor Trustee, will step in to manage the Trust and make distributions as necessary and appropriate. A Revocable Living Trust also allows for the Grantor to amend or revoke the Trust at any time by providing to the Trustee appropriate written amendments or restatements signed by the Grantor. During the Grantor's lifetime, they will receive payments of the net income of the Trust at pre-determined intervals. The Grantor may also give copies of the Agreement to people with whom they are close and that they trust, such as a spouse or their children. Finally, the Grantor should go through the process of transferring the assets described by the Trust Agreement into the Trust.
What is a Living Trust?
A Living Trust is a Trust created by a person (the "grantor") for use during that person's lifetime. Living Trusts provide for payments of income for that person and the distribution of the remaining assets of the Trust upon that person's death. Although they sound complicated, Living Trusts are rather simple. Essentially assets are put into a "Trust" and a person is designated to manage those assets for the person who benefits from that Trust. The person who manages the Trust could be the person who made the Trust (the grantor), someone else (a "trustee"), or even a paid professional. Living Trusts can also be amended or revoked at any time by the grantor.
An advantage of Living Trusts is that they do not have to go through the standard probate process, so funds can be distributed to cover your death expenses or to care for minors or disabled family members. They also may be able to make funds and assets available more quickly than Wills. Living Trusts avoid the probate proceedings and fees associated with Wills. In some states, the probate proceedings associated with the distribution of assets as outlined in a standard Will can take months. A Living Trust is a way for you to set aside funds for quicker distribution for caring for your minor children, disabled family members, or pets. Assets can also be designated to support you if you become incapacitated and cannot manage your finances yourself.
Living Trusts are also private. In most cases, Wills become public record once probate begins. Anyone can request copies of your Will easily. If you have certain assets you want to distribute privately, you can use a Living Trust to manage the distribution of assets. If you appoint a professional executor, even your family wouldn't have to know about the Trust or beneficiaries.
When to Use a Living Trust
When looking to make a Living Trust, Rocket Lawyer makes it easy. Sign up to create your free Living Trust document. When to use a Living Trust: - You have assets you want to be distributed quickly upon your death or incapacitation. - You have assets you want dispersed privately. - You want to appoint a person or professional executor to manage the assets held in the Trust.
Note: This Living Trust template is not appropriate for individuals whose estate exceeds the federal estate tax applicable exclusion limit. According to federal tax law, this trust is not appropriate for estates (including life insurance proceeds and retirement plans) which exceed the federal estate tax applicable exclusion amount ($5,200,000.00).
A revocable living trust fits best when you need flexible, long-term control over how your assets are managed and passed on. You don’t need to be wealthy to benefit from a revocable trust. It’s simply a smart way to keep your affairs clear, private, and stress-free. With everything mapped out, your estate is managed on your terms.
How to Create a Living Trust
You fill out a form. The document is created before your eyes as you respond to the questions. At the end, you receive it in Word and PDF formats. You can modify it and reuse it.
Start by clicking on "Fill out the template". Answer a few questions and your document is created automatically. Your document is ready! You will receive it in Word and PDF formats. You will be able to modify it.
The process involves several key steps. First, decide who is creating the trust. Choose whether the revocable living trust is being set up by one person, a married couple, or two individuals working together. Next, name the grantor. Identify who’s putting property or funds into the revocable trust. Then, choose the trustee. This person manages the trust. You can serve as your own trustee, select someone else, or appoint co-trustees to share responsibilities. After that, appoint a successor trustee. Pick someone you trust to take over if the original trustee dies, becomes disabled, or steps down.
You must also define the trustee’s powers. Decide how much authority the trustee will have. You can restrict certain powers or grant them authority under the Uniform Trust Code. Then, set compensation and bond requirements. Specify whether the trustee will receive payment and, if so, whether a bond is required for additional protection. List the property being transferred. Describe all assets going into the living revocable trust. Examples of assets you can put into a trust include bank accounts, investment accounts, real estate, and business interests. You can also include tangible personal property, including jewelry, collectibles, and artwork.
Next, name the beneficiaries. List who will receive the assets and what percentage or share each one gets. If a minor will be the beneficiary of any assets in the trust, clearly specify how they will receive the property. Add special instructions. Include any specific gifts or wishes, like setting aside funds for a pet or donating to charity. Review the document. Make sure everything is correct and clearly reflects your intentions. Sign and notarize. This final step makes your revocable trust official and enforceable.
Types of Trusts
Keep in mind there are different types of trusts, each built for a purpose—protecting assets, lowering taxes, or providing for family. The right one depends on what you want your trust to achieve.
What is the difference between Revocable and Irrevocable Trusts? Revocable Living Trusts are most commonly used. Revocable Trusts are easy to change. Irrevocable Trusts cannot be changed after they are signed. Most often, Revocable Trusts turn into Irrevocable Trusts after the trust maker dies. Irrevocable Trusts are frequently only used by those wealthy enough to fund the Trust without possibly needing the assets later.
Advantages and Disadvantages of Revocable Living Trusts
Advantages
- Faster distribution of assets: Living Trusts avoid the probate proceedings and fees associated with Wills. In some states, the probate proceedings associated with the distribution of assets as outlined in a standard Will can take months. A Living Trust is a way for you to set aside funds for quicker distribution for caring for your minor children, disabled family members, or pets. Assets can also be designated to support you if you become incapacitated and cannot manage your finances yourself.
- They are private: In most cases, Wills become public record once probate begins. Anyone can request copies of your Will easily. If you have certain assets you want to distribute privately, you can use a Living Trust to manage the distribution of assets. If you appoint a professional executor, even your family wouldn't have to know about the Trust or beneficiaries.
- If you become incapacitated, your trustee can step in and manage your finances.
- Beneficiaries get access to assets right after death, without long delays.
- Transfers and updates stay simple, even as your finances or life change.
- If your preferences or circumstances shift, you can change or update the trust at any time.
Disadvantages
A revocable living trust takes more work to set up and maintain than a will. You need to retitle your assets in the trust’s name and pay higher upfront costs. It doesn’t protect against creditors or taxes, and it needs ongoing attention to stay valid. Potential drawbacks include: - Unfunded trusts cause problems and can leave some assets unprotected. - You’ll still need a pour-over will to cover anything left out.
Understanding both sides helps you decide if a revocable living trust fits your long-term plans.
State-Specific Trust Laws
Most states follow the Uniform Trust Code, which sets the rules for creating and updating living trusts and defines the rights of grantors and beneficiaries. Some states, however, add their own twists or separate laws. Check your state’s regulations below to make sure your trust meets all legal requirements.
Using a Template
You don’t need to be wealthy to benefit from a revocable trust. It’s simply a smart way to keep your affairs clear, private, and stress-free. With everything mapped out, your estate is managed on your terms. With Legal Templates’ revocable living trust template, helping you keep everything organized and in line with what you want.
View a sample revocable living trust to get a clear idea of how it’s structured. Then, download your free revocable living trust template in Word or PDF when you’re ready.
Important Considerations
The creation and interpretation of Living Trusts are a matter of both state and federal law. According to federal tax law, this trust is not appropriate for estates (including life insurance proceeds and retirement plans) which exceed the federal estate tax applicable exclusion amount ($5,200,000.00).
When looking to make a Living Trust, Rocket Lawyer makes it easy. Sign up to create your free Living Trust document. If you'd like to read more about Living Trusts and other estate planning essentials, check out our estate planning documents.
Living Trust FAQs
- What are the advantages of having a Living Trust? Faster distribution of assets, privacy, and management during incapacity.
- What is the difference between Revocable and Irrevocable Trusts? Revocable trusts can be changed; irrevocable trusts cannot.
Conclusion
A Living Trust is a valuable tool for UK consumers seeking to manage their assets privately and efficiently. By using a free template, individuals can create a revocable trust tailored to their specific needs, ensuring assets are distributed according to their wishes without the delays and publicity of probate. However, it is crucial to understand the responsibilities involved, including the need to fund the trust and consider state-specific laws. For those with estates below the federal estate tax exclusion limit, a Living Trust offers a flexible and secure method of estate planning.