by Melissa Nykorchuk

Created on: April 16, 2010   Last Updated: April 17, 2010

A revocable living trust can be a valuable tool in creating a solid estate plan.  Individuals wishing to leave assets to beneficiaries without having the assets go through probate court can design a living trust to fulfill their needs.

What is a Revocable Living Trust?

A revocable living trust is an arrangement that allows an individual to create a decree that allows all assets within the trust to be governed by a trustee.  Individuals generally are the first trustee named in a revocable living trust and name a subsequent trustee that is appointed at the time of their death.  As the name suggests, a revocable living trust can be revoked by the original creator at any time.The

The Benefit of a Living Trust

One of the biggest benefits to creating a living trust is that a living trust avoids probate court at the time of a benefactor's death.  Probate court often takes months to settle debts and then pass on any assets to beneficiaries while assets held in a living trust can be passed on quickly by the successor trustee.

When a will is sent to the probate court to be probated, any assets of the estate are subject to creditors and all creditors have a set amount of time to come forward and collect debts from the estate.  The court waits until the time limit for creditors expires before paying what is left to the named beneficiaries.

Assets in a Living Trust Gets Dispersed by the Trustee instead of the Probate Court

The successor trustee of a revocable living trust is the person who handles the trust after the original benefactor dies.  The successor trustee is responsible for ensuring that all assets are transferred to the beneficiaries named.  Once all assets are dispersed, the living trust no longer exists.

A Revocable Living Trust is Attachable by Creditors

Assets held in a revocable living trust are not protected from creditors and anyone that has won a judgment against the individual creator of the trust is entitled to their money.  A revocable living trust assets can be attached by any creditor that is owed by the individual despite being held in a trust.

Creditors are also able to collect their money on debts left by the deceased benefactor.  The trust is held accountable for any debts incurred by the individual who created the trust, although it may be harder for creditors to know what assets exist because the trust does not go through probate. 

Even if a living trust is created, it is still important to have a will just in case.  A will ensures that any assets not named in the revocable living trust will still be handed out to the parties named by the benefactor.  If there is no will written and the trust does not cover all assets, any property left will be divided among legal relatives according to the law. 

A living trust is not for everyone.  Sometimes a living trust can get complicated and expensive.   Not everyone can handle the extensive paperwork that comes with administering a trust and a will will work just as well for most people.

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