A revocable living trust puts you in control of your estate. The trust is similar to a will in that it contains directives about how your assets should be distributed after you die. Unlike a will, you can change your trust whenever you wish. In fact, you can even transfer real estate into the trust without giving up the right to mortgage or sell the property later. For as long as you live, you're not only the trust's grantor; you're also its trustee and beneficiary.
Establishing a Revocable Trust
You establish your trust with a document called a declaration of trust. The declaration must specify that the trust is revocable. Your attorney can prepare your declaration, or you can purchase a form that complies with your state's laws. You're the trust's grantor -- the individual who "grants" assets to the trust. You're also the trustee, which means you're in control of the trust's assets. You can transfer more assets into the trust or remove assets from it. You may also change beneficiaries. And you can revoke, or close, the trust at any time. When you create the trust you'll likely appoint a successor trustee to manage the trust after you die.
Reasons to Establish a Revocable Trust
In most cases, you use a trust in place of a will. In addition to the obvious benefit of allowing you to make changes to or revoke the trust, a trust also avoids some of the complications a will creates. Unlike a will, for example, the trust doesn't have to go through probate. As a result, the successor trustee can often manage the trust without the assistance of an attorney. Often, settling the estate is a faster, more private and less-expensive process with a trust than it is with a will.
The assets you place in the trust are referred to as trust property. Those that don't have titles or deeds simply are transferred with an assignment of property document. Assignment means transfer, and an assignment of property lists the property being placed in the trust. Titled property, such as cars and real estate, are transferred the same way, but there's an additional step involved. You must assign the property and you must also transfer title. In the case of real estate, you transfer title using a deed. The deed transfers ownership from you as an individual to you, the trustee. For example, if your name is John Doe, the deed transfers ownership of the property from John Doe to John Doe, trustee of the trust.
Transferring Property From the Trust
You make changes to the trust using a document called an amendment and restatement of declaration of trust. This document serves two purposes. First, it changes the original trust document in some way. It also reaffirms the validity of the original declaration and any future amendments. In essence, it condenses the original declaration and current and future amendments into a single document. To remove real estate from the trust, you note the transfer of ownership on the trust amendment and prepare a deed that transfers ownership from you, the trustee of the trust, to whomever you wish to own the property, including yourself.