What Is a Revocable Trust? How Is It Used in Estate

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The Answer is A revocable living trust is created to inform the trustee: (a) to whom the income and principal should be distributed; (b) when the distributions are to be made; (c) how the property held in trust should be managed; and (d) how long the trust should be continued. A revocable living trust provides no federal tax advantages to the creator of the trust, since the creator has the power to revoke the trust at any time. The creator is assumed to be in control and to own all of the trust property. Trust income is taxable to the creator of the trust no matter to whom it is paid, and upon death the assets included in the trust are also included in the creator's gross estate for the federal estate tax purposes.
There are several advantages to creating a revocable trust. (a) Property placed in a revocable trust bypasses probate. This can avoid delays and probate costs. (b) A living trust can be established as a depository of a variety of cash assets. (c) A person can act as trustee when in good health, but a successor trustee can take over if the owner becomes incapacitated.
The creator of a revocable trust still needs a will, since an individual may forget to put all of the possessions in the trust. The will should include a pour-over provision that will sweep any remaining property into the trust at the owner's death. The will can also be used to distribute personal belongings, name guardians for children, and provide for a personal representative to take care of any unfinished business.

What Is a Revocable Trust? How Is It Used in Estate

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