What Is a Revocable Living Trust in Virginia?

A revocable living trust is a powerful estate planning tool that allows someone to provide a set of detailed instructions about how they want certain assets to be treated – both during life and at death.

An attorney for wills and trusts can talk to you about your needs and advise you on what type of trust provisions may be able to address them.

What Is a Trust?

To understand what a revocable living trust is, it is important to understand the foundation of trusts generally. A trust is a legal arrangement in which you, the grantor, or person making the trust, instruct the trustee that you name to manage the trust assets for the benefit of the designated beneficiary.

In some trusts, you may have all three roles as the grantor, trustee, and primary beneficiary.

Living Trusts

The trust assets can be managed for your benefit during your lifetime. This allows you to develop an estate planning tool with the help of a revocable living trust attorney that plans for what you want to happen to your assets after your passing, as well as to provide you with some safety in the event of incapacitation.

As the person making the trust, you get to say how you want the trust assets used. If you encounter a medical issue, you can provide in the trust document that trust funds will be used for your health and general welfare.

Revocable Trusts

A revocable trust is one that you are free to revoke or modify at any time. Having a revocable living trust in place allows you greater flexibility because you can change the instructions of the trust if an unforeseen need arises. Revocable trusts become irrevocable at the time of your death, and the successor trustee follows the instructions in the trust document regarding your property.

Your trust may instruct the trustee to pay for the health, education, and general welfare of your beneficiaries as needs may arise, to give lump-sum distributions at certain ages, or to provide for beneficiaries in another manner that you designate in your trust.

What Are the Benefits of a Revocable Living Trust?

In addition to the greater degree of control and flexibility that revocable living trusts provide, another major benefit is that you can avoid the probate process by using a trust. Probate is concerned only with the assets that you own personally in your own name at the time of your death. When you place assets in the trust, the trust – not you personally – becomes the new owner of those assets.

How Can I Create a Revocable Living Trust?

The lawyers specializing in wills and trusts at Golightly, Mulligan & Morgan are dedicated to providing every client with personalized attention.  They take the time to understand your needs and draft a trust that addresses them. They put our knowledge and experience to use by creating a customized document that ensure your wishes are carried out.

Revocable Trusts vs. Irrevocable Trusts

One of the most common questions we receive in our estate planning practice is, "What is the difference between a revocable trust and an irrevocable trust?"  In this blog, we will provide a brief overview of the key differences between these types of trusts and give a few examples on why estate planners use them.

 

A revocable trust is often also referred to as a "living trust."  Estate planning lawyers use revocable living trusts to avoid court supervised probate, which often allows for the efficient and expedient distribution of a decedent's property.  As its name implies, a revocable living trust is easy to amend or revoke.  Indeed, for all intents and purposes, assets owned by revocable living trust are handled much in the same way as assets owned by an individual.  For example, while the creator of the trust is still alive, these types of trusts do not file their own tax returns because income flows directly to the person who created the trust, often called the "grantor."

 

On the other hand, an irrevocable trust is often used by estate planning attorneys to allow clients to either remove assets from the client's estate for estate tax purposes, or to provide added asset protection features.  The primary concept behind an irrevocable trust is the fact that the person who set up a trust no longer has ownership and control over the assets placed inside the trust.  Because such a trust may only be changed under very limited circumstances, the person who created the trust may avoid or mitigate estate taxes otherwise due on those assets when he or she dies.  With the proper planning, a client may also be able to use an irrevocable asset protection trust to exempt trust assets from a tort creditor or in a bankruptcy proceeding.

 

Although irrevocable trusts have somewhat limited application these days due to the high estate tax exclusion (currently, estate taxes only hit individuals with more than $11,200,000), we do use these trusts for asset protection purposes.  Conversely, we use revocable living trusts in our practice quite a bit to allow clients to avoid the probate process.  You may read more about the probate process in our "what is probate" blog here on our website.

 

Thanks for taking the time to read this.  Let us know if there's anything we can do to assist you with your planning.  Email: info@golightlylaw.com or call at 804-658-3873.