Revocable Living Trusts:
A Flexible Estate Planning Tool
A revocable living trust (also called a revocable trust or simply a living trust) is one of the most popular estate planning tools in the United States. It allows you to manage and protect your assets during your lifetime while making things easier for your loved ones after you're gone.
In simple terms: You create a legal entity (the trust), transfer ownership of your assets into it, and retain full control over everything while you're alive and competent. You can change, add to, or completely cancel the trust at any time.
What Is a Revocable Living Trust?
A revocable living trust is a written legal agreement created during your lifetime ("living") in which you (the Trustor or Owner of the trust), fund the trust by placing assets into this trust that you control.
- You typically serve as the initial Trustee, managing the assets just as you did before.
- You name Successor Trustees (often a spouse, adult child, or trusted friend) who step in if you become incapacitated or pass away.
- You designate Beneficiaries who will receive the assets according to your instructions — usually after your death, without going through probate court.
Because the trust is Revocable, you keep complete flexibility: amend terms, add/remove assets or beneficiaries, or revoke it entirely.
Important note: A revocable living trust is different from an Irrevocable trust. Once an irrevocable trust is created, you generally cannot change it or take assets back out, but it can offer tax advantages or creditor protection that revocable trusts do not.
Key Benefits of a Revocable Living Trust
Revocable living trusts offer several advantages, especially compared to relying solely on a will:
-Avoids or Minimizes Probate — Assets in the trust pass directly to beneficiaries without court supervision, which can save months or even years, reduce costs, and keep details private (probate records are public).
- Privacy — Unlike a will, a living trust isn't filed with the court and doesn't become public record.
- Control During Incapacity — If you become unable to manage your affairs (due to illness or injury), your successor trustee can step in seamlessly — no need for a court-appointed guardian or conservator.
- Flexibility— You can update the trust as life changes (marriage, divorce, new grandchildren, etc.).
- Multi-State Property Simplicity — If you own real estate in multiple states, a trust helps avoid separate probate proceedings in each state.
- Faster Distribution to Heirs — Beneficiaries often receive assets more quickly after your passing.
Potential Drawbacks and Limitations
While powerful, revocable living trusts aren't perfect for everyone:
- Upfront Costs — Setting up a trust usually costs more than a simple will (often $1,000–$4,000+ with an attorney, depending on complexity and location).
- Funding Is Essential — The trust only avoids probate for assets actually transferred into it (called "funding"). You must retitle deeds, accounts, etc., into the trust's name — this step is often overlooked.
- No Tax Savings on Estate Taxes — Assets in a revocable trust are still considered part of your taxable estate (no federal or state estate tax reduction for most people).
- No Creditor or Medicaid Protection — Because you retain control, creditors can still reach trust assets, and it doesn't shield assets from long-term care costs.
- Ongoing Maintenance — You may need to update the trust or add new assets over time.
How to Set Up a Revocable Living Trust
- Consult an Estate Planning Consultant or Attorney — Laws vary by state, so work with a qualified professional (DIY options exist but carry risks if not done correctly).
- Draft the Trust Document — This outlines trustees, beneficiaries, distribution instructions, and any special provisions.
- Sign and Notarize — Follow your state's requirements (many require notarization and sometimes witnesses).
- Fund the Trust — Transfer assets:
- Real estate → Record a new deed
- Bank/investment accounts → Change titles or beneficiary designations
- Personal property → Use a "pour-over" will or assignment document
- Maintain and Update — Review periodically (life events, law changes) and keep good records.
Many people pair a revocable living trust with a pour-over will (to catch any forgotten assets) and other documents like powers of attorney and advance healthcare directives.
Is a Revocable Living Trust Right for You?
It often makes sense if you:
- Own real estate (especially in multiple states)
- Have significant assets or a complex family situation
- Value privacy and want to avoid probate delays
- Want a plan for incapacity without court involvement
It's less necessary if your estate is small/simple and probate in your state is straightforward/inexpensive.
This page provides general educational information only. Estate planning is highly personal and affected by state laws (including Arizona-specific rules on community property, homestead exemptions, etc.).
Always consult a qualified estate planning consultant or attorney to determine what's best for your situation.
Laws and costs can change, and improper setup can create problems for your heirs.
Ready to explore whether a revocable living trust fits your needs?
Contact a local Claim My Legacy estate planning professional today.
602-550-7365 or 602-332-0780 Email: info@ClaimMyLegacy.com