Revocable Living Trust

The Basics

A Revocable Living Trust is an estate planning arrangement designed to achieve a number of goals. The three primary benefits that a Revocable Living Trust provides:

1. Probate Avoidance/Efficient Wealth Transfer
2. Preservation of Assets
3. Privacy Protection

A Revocable Living Trust can be created by one person or by multiple people (like a married couple). When a couple creates a Revocable Living Trust, it is known as a Joint Revocable Living Trust.

To properly unlock these benefits, the Revocable Living Trust must be "funded." This means that your assets must be directly transferred into the Trust or name the Trust as beneficiary. While this process may seem tedious, GoGo Estate provides Standard Plan purchasers appropriate guides to help them fund their trust.

Who Should Have a Revocable Living Trust?

Generally, the following types of customers could benefit from having a Revocable Living Trust:

1. Those with minor children (i.e., those under 18)
2. Those with special needs children
3. Those with more than $250,000
4. Those concerned with an efficient transfer of wealth
5. Those who want to protect assets for future generations

The Details

The Revocable Living Trust provided in the Standard Plan is governed by a trust document known as the Trust Declaration (for single people) or the Trust Agreement (for couples creating a trust jointly). The trust document acts like the bylaws for the Trust, detailing how the assets held within the Trust will be administered, managed, and distributed both during life and after death.

During your lifetime, you have the power to distribute trust assets as you see fit. However, if you become incapacitated, someone else (known as the successor trustee) distributes trust assets for your health, support, and maintenance. The successor trustee operates in a fiduciary capacity to you, meaning that all of their actions must have your best interests in mind.

When you die, the successor trustee is responsible for paying any debts, taxes, and expenses that you owe at death. Upon the payment of these expenses, the successor trustee can begin the process of distributing the remaining trust assets to the beneficiaries you designated in the trust document. If you create a Joint Revocable Living Trust with your spouse or partner, the survivor receives the benefit of the trust.

Regardless, when the original creator or creators of the trust die, here are three primary ways in which the beneficiaries may receive their share of the trust assets:

1. Outright Distributions: If the beneficiary is over a certain age or is not receiving means-tested government benefits (like SSI or Medicaid), then the successor trustee will distribute the beneficiary's share of the trust assets outright to the beneficiary with no strings attached.
2. Subtrusts: If the beneficiary is of an age specified by you in the Standard Plan Questionnaire (you can pick between the ages of 21 and 40), the beneficiary's share is held in a "Subtrust" created after your death. Prior to the beneficiary turning that age, they receive distributions for the education, health, support, and maintenance. Once they turn the age you choose, they receive a lump-sum distribution from the trust.
3. Supplemental Needs Trust: If a beneficiary is receiving means-tested government benefits like SSI or Medicaid, the beneficiary's share is distributed into a supplemental needs trust. This is so that the beneficiary does not lose their important government benefits. There are strict distribution requirements and limitations contained within the provisions of the supplemental needs trust.

The remaining provisions of the trust relate to trustee powers, the process for appointment, replacement, or removal of successor trustees, and whether or not the trustee is entitled to compensation (by default, the trustee is entitled to "reasonable compensation"). The trust document also outlines procedures for trust ownership of retirement plans and prevents beneficiaries from contesting the terms of the trust so that your wishes are locked in stone.

Create a Trust

If you are interested in having a Revocable Living Trust, you should seriously consider GoGo Estate's Standard Plan. If, however, you have a blended family, you should consider our Complex Plans instead.