Revocable Living Trust

In its simplest form, a trust is an agreement that provides for the management of property. A trust involves at least three parties:   

The Trustmaker, sometimes referred to as the settlor or grantor, is the person who creates the terms or rules of the trust; 

The Trustee is the person who agrees to accept the Trustmaker's property and manage it as the trust directs. A trust can have more than one trustee at a time. Each cotrustee must decide for himself or herself how best to carry out his or her fiduciary duties. Beware that a cotrustee can be held responsible for another cotrustee’s breach of a fiduciary duty. Thus, it is important that all cotrustees pay close attention to everything that is done in the administration of the trust. If there is any question or problem, that should be communicated to the other cotrustee or cotrustees immediately. 

and; The Beneficiary is the person who receives the benefit of the property held in the trust. Typically this is the Trustmaker during his lifetime and the children of the Trustmaker when the trustmaker dies. 

A revocable living trust is a trust document created during the Trustmaker's lifetime. A revocable living trust is often referred to as an inter vivos trust, which means during life. The trust is revocable due to the Trustmaker's ability to end (terminate) or change (amend) the trust. The Trustmaker generally names themselves as both Trustee and beneficiary of the trust during his lifetime. The Trustmaker also names backup Trustees to act for their benefit in the event of their disability and death.  

It may be easiest to think of a trust as a holder or a bucket used as a carrying case for property that comes with an instruction book written by the trustmaker. A well-drafted living trust contains instructions for the care of loved ones. and tells the Trustee how to care for the beneficiaries. The instructions are detailed enough to cover both expected and unexpected events that might occur. Not only do these instructions tell the Trustee how to use the money and property to care for the beneficiaries, but will frequently guide the Trustee as to why the Trustmaker has left those instructions.   

After a Trustmaker has signed a revocable living trust, the Trustmaker then needs to fund his trust. Funding is the process through which the individually owned assets of the Trustmaker are retitled and transferred into the trust. Once the revocable living trust has been funded, the Trustee will control all of the assets in the Trust's name. It is important to remember that a Trustee cannot control assets not titled in the name of the Trust. Missouri is a community property state, and generally, married couples in this state create a joint revocable living trust. The married couple will then retitle their property into the name of their joint trust. 

A fully funded and properly executed estate plan that includes a revocable living trust avoids both living and death probate. It is widely accepted that avoiding probate is extremely beneficial to the family due to a variety of reasons, including reducing estate administration time and costs along with keeping your matters private. 

A living probate occurs when a person can no longer handle his own affairs. Upon incapacity, an interested party can petition the court to authorize a guardian and conservator to take control of the person and his property. The court then appoints a guardian/conservator to make decisions about the person's well being and to guard their property. Court supervision, which includes annual reports and financial statements to the court, continues until the person recovers or dies. Since it is a process which involves no planning, there are occasional family disagreements about who should serve as guardian/conservator and what should be done. Even when the family agrees that the parent is incapacitated and who will serve as guardian/conservator, it is a costly and time-consuming process to have a guardianship and conservatorship created. More importantly, the court will limit the help available for family members such as adult children or aging parents.  

A revocable living trust eliminates the need for a living probate. If a Trustmaker is found to be incompetent (as defined by the Trustmaker), the disability Trustee steps in to act in his place. This relieves the probate court of any need to name a guardian and conservator to make decisions for the disabled party or guard the disabled party's property. Unlike a guardianship and conservatorship, the disability Trustee has the flexibility to carry out instructions for the benefit of the Trustmaker as well as his family, without court supervision or court proceedings.   

Probate at death is a court supervised process for the transfer of property at death. Probate is required for all property which is solely owned or does not have a beneficiary designation. Property transfers which bypass the probate court can reduce the expense and time delays of that process. 

A revocable living trust is one way to avoid this process, by allowing solely owned property to be converted to trust ownership without sacrificing lifetime control over the property.   Clients that utilize a revocable living trust do not have to file their trust documents in a public forum. Probate files are public records and subject to public scrutiny. Parties that utilize a will or die intestate (without a will) must file an inventory with the court which includes a description and valuation of all of their assets, a list of their debts and creditors, and to whom all of their property is to be distributed. Clients with a fully funded revocable living trust, may keep all this information private.