A recovable living trust is a legal instrument that gives flexibility in avoiding probate of real estate and other property. A revocable living trust is similar in many ways to joint tenancy or joint ownership but it avoids many of the disadvantages and limitations.
•The property transferred through the revocable trust is no longer individually owned, but as the original or first named trustee, you, as the owner of the trust, remains in full control of the real estate and other assets listed in the trust.
•As the owner of the trust, you can make yourself the principal beneficiary and make your spouse, or your children, the successor trustees.
•Usually, the revocable living trust names one or more trustees, and one or more successor trustees. The second trustee assumes responsibility if the original trustee dies, becomes incapacitated, or retires. If the second trustee is unable to perform the required duties of the trust, the sucessor trustee distributes the assets as set forth in the agreement.
•As the original trustee, as long as you live, you have total control of the assets and any income made on them. You can use them, sell them, give them away, take them out of the trust, and you can add new assets to the trust.
•The original trustee retains the right to change beneficiaries, change how the assets will be divided, and make any other amendments to the trust as they become necessary.
A revocable living trust does not exempt estate or income taxes, therefore since you have control of the assets and any income they produce, you are liable for any taxes that are incurred.
No gift taxes are paid on the assets that are transferred to the trust, but all trust assets are included in your taxable estate for under federal income tax laws. Beneficiaries of the trust are liable for any state inheritance or estate taxes.
Although you can draw up a revocable living trust for yourself, it is always advisable to consult an attorney whenever undertaking such a project.
There are forms and advice offered on the internet and in local newspapers and magazines but since there are so many legal issues to consider, and unless you are familiar with the different federal and state laws concerning revocable living trusts, irrevocable living trusts, wills, probate proceedings, state and federal tax laws, and other legal matters, you should consult an attorney who is versed in estate planning.