Before discussing a revocable trust, it is necessary to define the parties involved. The first party is the Grantor (aka Trustor or Grantor), the second party is the trustee, and the third party is the beneficiary. The grantor establishes the trust, while the trustee who is usually a person or bank manages the trust assets contained in the trust for the benefit of a beneficiary. In a Revocable Living Trust the grantor, trustee, and initial beneficiary are usually the same person or a married couple. The trust will also name successor trustees and beneficiaries.

Explanation of Living Trust Revocable Living Trust

A Revocable Living Trust is a trust that is created grantor’s lifetime and the grantor retains the power to revoke the trust while living. A trust is described as a Living Trust when it is established during the life of a person as opposed to a testamentary' trust, which comes into being after the death of the grantor. A trust is described as a ''revocable'' trust when the grantor retains the right to revoke or amend the trust as oppose to an irrevocable trust in which the grantor does not retain the right to revoke or amend the trust. Revocable Living trusts are often referred to as "living trusts."

A typical revocable living trust allows the grantor to retain management and control over the assets of the trust and to receive the income from the trust property during her/his lifetime. The management of a Revocable Living Trust is the responsibility of a trustee. Most grantor’s name themselves as the trustee. By naming themselves as trustee, the grantor can transfer the asset to the trust and remain in control of the assets during her/his lifetime. In addition, the grantor can access the trust assets, if necessary in the future, or can make changes in the administration of the trust after he sees how the trust, the trustee, and the beneficiaries function. It is common practice to also name a successor trustee who will manage the trust's assets in the event the grantor becomes incapacitated, unable or unwilling to act as trustee.

A revocable living trust is most appropriately used in conjunction with a will. Even though the grantor may place most of his assets in the trust during his lifetime, there will usually be some property which is not transferred and which remains part of his probate estate. A will acts as a complement to the trust, pouring over the probate assets into the trust after the grantor's death. Unlike a will, a living trust can also (a) provide you with a vehicle for managing your property during your life, (b) authorize the trustee to manage the property and use it for your benefit (and your family) if you should become incapacitated, thereby avoiding the appointment of a guardian for that purpose and (c) manage your assets the way you want for your children after your death.

For a trust to be effective it has to own title to the property or asset. Funding is the process of transferring the name on accounts or property to the name of the trust. Please see Trust Funding Section of this site

Creation by Husband and Wife

When a revocable Living trust is created by a Husband and Wife in California, it is common for the spouses to act as joint Grantors of the trust. During marriage, the spouses have present, equal, and existing interests in the assets, and neither may dispose of the property for less than fair and reasonable value except with the written consent of the other spouse.

Purposes of a Revocable Trust

In General the Purposes of Revocable Living Trust are a Follows:

Probate Avoidance
A properly drafted, executed and funded trust will avoid probate

Property Management in Case of Incapacity
A properly drafted, executed and funded trust allows the trustee to have authority to manage the property for the Grantor in the event of her/his incapacity. If the Grantor is the original trustee, the successor trustee named in the trust will manage the property for the benefit of the beneficiary. This may avoid a cumbersome and costly conservatorship proceeding making it unnecessary to appoint a conservator to take charge of the Grantor's estate and thus avoid court involvement in sensitive family affairs. If the Grantor should become unable to provide properly for his or her personal needs for physical health, food, clothing, or shelter, a conservator of the person might still be required.

Deferral or Elimination of Federal Estate Taxes
A Living Trust may defer the payment of estate taxes to the death of successor beneficiaries or completely eliminate all Federal Estate Taxes.

Investment Advice
A revocable Living trust may also be created to receive investment advice and direction during the Grantor's lifetime. The grantor may delegate investment decisions and the authority for making investment decisions to a third party trustee. This third party trustee can be given the authority to act alone or as a co-trustee with the Grantor.

Privacy/Confidentiality of Trust Terms and Assets
Every person’s will is of public record at death. Whereas, a Revocable Living trust is a private and confidential legal document which the terms and assets may be kept from public view. In contrast, the records of probate proceedings are of public records.

Consumption of Time
The after death administration of a Revocable Living Trust saves a vast amount of time. The trust permits the trustee to distribute the trust estate as soon as the trustee determines that the debts have been paid. Whereas, a will requires a lengthy and costly court supervised probate proceeding

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