Revocable Trust: Fill & Download for Free

It depends on whether you hire me or not.I’m only partially kidding. As I often say, there isn’t a “one size fits all” answer. Each situation is different. I’ll pose some typical hypothetical scenarios:Scenario 1: Dad has set up a revocable trust, with a pittance for his family and the vast majority for the benefit of his current fling, Ms. Fifi LaRue, a noted fan dancer on Thursdays at the “A Fool and His Money” nightspot. Wife and kids hire me. I call Dad, and say, “Perhaps a less generous approach to your transactions with Ms. LaRue is advisable.” Dad says, “Ok by me” and signs a complete revocation of the trust.No fuss, no muss. (It’s not a perfect solution because I can’t bill megahours. However, I’ll catch Fifi’s show and bill it as “legal research.” But I digress.)Scenario 2: similar but Dad got a bit too exuberant in privately demonstrating his appreciation of Ms. LaRue’s talents, resulting in a fatal cardiac episode. The trust, while formed as a revocable trust, is now irrevocable by virtue of Dad’s untimely demise. That said, the trust might be open to challenge. Perhaps Dad transferred assets over which he did not hold authority. Perhaps Dad was lacking testamentary capacity. Perhaps the signature on the trust was fraudulently obtained. Lots of possibilities. Possibly breakable, but not as routine. (Also lots of billable hours! Certainly detailed investigation of Ms. LaRue’s charms is required. Sometimes the law requires night work.)Scenario 3: Dad has been systematically victimized by his family and friends, incontrovertibly established by documents. The only solace in his life has been the platonic friendship of his old college chum, Gertrude Kowalski, who due to unfortunate financial events has been forced to take night work as a dancer under a stage name to support her infirm great-aunt. Dad only gets a few minutes of conversation with his treasured friend at breaks in her set, during which they discuss profound issues of Incan architecture and Persian carpet-weaving techniques. The trust comes from Dad’s natural gratitude for this devotion. Harder to break. (But more importantly, obviously in this example Ms. LaRue is the one who has hired me, due to our overlapping interest in the hidden meaning of Machu Picchu. I knew my Art History class would come in handy someday!)

This is not a question that can be answered without knowing the terms of the trusts, the title to the assets, the jurisdiction involved, and more. Consult an estate attorney.

A revocable trust and living trust are separate terms that describe the same thing: a trust in which the terms can be changed at any time. An irrevocable trust describes a trust that cannot be modified after it is created without the consent of the beneficiaries.A trust is a separate legal entity a person sets up to manage his assets. Trusts are set up during a person's lifetime to assure that assets are used in a way in which the person setting up the trust deems appropriate. Once assets are placed inside a trust, a third party, known as a trustee, manages them. The trustee determines how the assets are invested and to whom they are distributed when the owner of the trust dies, though a trustee must manage the trust in accordance with the guidelines laid out when the trust was formed. It is common for a wealthy person to use a trust as opposed to a will for estate planning and for stipulating what happens to his wealth upon his death. Trusts are also a way to reduce tax burdens and avoid assets going to probate.Revocable Trust (Living Trust)The two basic types of trusts are a living trust taxes[1], also known as a revocable living trust or simply a living trust, and an irrevocable trust. The owner of a revocable trust may change its terms at any time. He or she can remove beneficiaries, designate new ones, and modify stipulations as to how assets within the trust are managed.Given the flexibility of revocable or living trusts in contrast with the rigidity of an irrevocable trust, it seems all trusts should be revocable. The reason they are not is that revocable trusts come with a few key disadvantages.Because the owner retains such a level of control over a revocable trust, the assets he or she put into it are not shielded from creditors the way they are in an irrevocable trust. If he or she is sued, the trust assets can be ordered liquidated to satisfy any judgment put forth. When the owner of a revocable trust dies, the assets held in trust are also subject to both state and federal estate taxes.Irrevocable TrustThe terms of an irrevocable trust, in contrast, are set in stone the minute the agreement is signed. Except under exceedingly rare circumstances, no changes may be made to an irrevocable trust.Footnotes[1] Revocable Living Trust Taxes