Next video:
Loading the player...

A revocable trust is a legal arrangement whereby a grantor transfers property to a trustee who holds the property in trust for the grantor’s benefit.  Under the terms of the trust, the grantor may amend or even terminate the trust up until his death.  Most often, the grantor is also the beneficiary of the trust, as well as the trustee. During the life of the trust, the beneficiary receives income from the trust assets.

Revocable trusts are also known as “living trusts”, “loving trusts” and inter-vivos-trusts”. 

There are a number of reasons why someone might use a revocable trust.  Often it is the practical purpose of making provisions for the administration of assets and investments should the owner become unable to do so.  This provides assurance to the grantor that the person he hand selects as trustee will be the one managing his assets if he can’t.

Another reason people use a revocable trust is for privacy.  Under the terms of a revocable trust, when the original beneficiary dies, the trust assets are distributed to secondary beneficiaries in much the same way they would be under a will.  The benefit of the revocable trust is that the trust assets do not go through probate courts where they become a matter of public record.

Revocable trusts are not an estate tax planning tool because, due to the control element retained by the grantor, the trust assets are still included in the grantor’s taxable estate.

Related Articles
  1. Financial Advisor

    When to Trust a Revocable Trust

    Unsure of how your assets will be dispersed once you're gone? Here's how setting up a revocable trust while you're here can be a big benefit.
  2. Financial Advisor

    Advisors: Tips for When to Employ Living Trusts

    Revocable living trusts accomplish estate planning objectives that aren't possible with a will. Here are some of the cases that show when to use a trust.
  3. Investing

    An Introduction To Exchange-Traded Grantor Trusts

    These funds offer a very hands-off experience for the low-involvement investor.
  4. Managing Wealth

    How To Set Up A Trust Fund If You’re Not Rich

    Contrary to popular opinion, trust funds are not just for the rich. Middle class citizens can set them up, as well.
  5. Investing

    A Look Into Creating a Trust Fund With ETFs (VCIT, SDIV)

    Learn the basics of how a trust works and the two most common types. Discover how to use ETFs to fund a trust and the different strategies.
  6. Managing Wealth

    What's a Trust Fund?

    A trust fund is a fund comprised of a variety of assets, established by a grantor, to provide financial security to an individual, most often a child or grandchild - or organizations, such as ...
  7. Retirement

    How To Set Up A Trust Fund In The U.K.

    A guide to the whys and wherefores of setting up this most versatile of estate-planning instruments in the United Kingdom.
Hot Definitions
  1. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
  2. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  3. Absolute Advantage

    The ability of a country, individual, company or region to produce a good or service at a lower cost per unit than the cost ...
  4. Nonce

    Nonce is a number added to a hashed block, that, when rehashed, meets the difficulty level restrictions.
  5. Coupon

    The annual interest rate paid on a bond, expressed as a percentage of the face value. It is also referred to as the "coupon ...
  6. Socially Responsible Investment - SRI

    Socially responsible investing looks for investments that are considered socially conscious because of the nature of the ...
Trading Center