Revocable Trust

A revocable trust is a fiduciary arrangement to hold ownership of an individual’s assets. The parties to the trust are the grantor, the trustee, and the beneficiary. The grantor, sometimes called the settlor or trustor, creates the revocable trust. The grantor establishes the terms of the trust and identifies the assets to be included in the trust. The grantor appoints the trustee and designates the beneficiary.

The grantor transfers the right to hold title to his or her assets to the trustee, who manages the assets for the benefit of a third party, the beneficiary. Upon that transfer, the assets become assets of the trust. The duties, rights and obligations of the three parties are governed by a trust agreement – a legal document — that’s also generated by the grantor.  A trust is not a legal entity, nor is it a corporate entity or partnership.

The foundational component of a revocable trust is the ability of the grantor to alter or revoke the trust during their lifetime. This flexibility – the ability to revoke the trust — distinguishes revocable trusts from irrevocable trusts, which generally cannot be changed or revoked once established. The freedom to revoke or alter the trust allows the grantor to respond to changes in personal circumstances or in the law.

Funding the trust involves transferring the grantor’s assets into the trust’s name. This can include real estate, personal property, life insurance, business interests and other assets. Properly funding the trust is essential for it to achieve its intended purposes.

Used as an estate planning tool in Texas, a revocable trust offers solutions designed to address specific needs of individual and families. Key advantages of using a revocable trust in Texas include:

1. Probate Avoidance: Upon the grantor’s death, assets held in the trust can be distributed to beneficiaries without going through the probate process. This can save time and reduce the expenses associated with a court-supervised estate administration.
2. Privacy Protection: Unlike a will, which becomes a public record through the probate process, a revocable trust offers privacy since it does not go through probate. This means the details of your estate distribution remain private.
3. Flexibility: A revocable trust can be changed or revoked at any time during the grantor’s lifetime. This flexibility allows for adjustments to the trust based on changing circumstances, such as new beneficiaries, changing financial situations, or shifting relationships.
4. Continuity During Incapacity: Should the grantor become incapacitated, a successor trustee can manage the trust assets according to the terms of the trust without the need for a court-appointed guardian or conservator. This ensures that the grantor’s financial affairs can be managed seamlessly.
5. Asset Management and Control: A revocable trust allows for detailed instructions on how assets should be managed and distributed. This can include stipulations for distributions based on age or life milestones.
6. Avoiding Multi-state Probate: For individuals who own property in multiple states, a revocable trust can avoid the need for probate proceedings in each state where property is located, which can significantly reduce complexity and cost.
7. Efficient Distribution of Assets: Since assets in a revocable trust bypass the probate process, they can be distributed to beneficiaries more quickly than assets that must go through probate.

When considering a revocable trust, it’s important to consult an accomplished estate planning lawyer who can provide guidance based on your life situation and objectives. The attorneys at Reagan Moore can help ensure your trust is properly structured to work in concert with other elements of your estate plan. But first, we want to hear what you’re thinking. Understanding your goals will shape our strategy for you. We’re here to discuss your options.