A revocable living trust is a legal agreement among a trustor, one or more trustees, and one or more beneficiaries. The trustee, or co-trustees, manage the trust's property for the benefit of the beneficiaries. Most revocable living trusts have one trustee.

Function

Whether it has one trustee or co-trustees, the primary purpose of a revocable living trust is to avoid probate. This is a legal proceeding in which the property of a deceased person is distributed according to a will or state law. Because the property is owned by a trust, it isn't included in the deceased person's estate.

Benefits

Revocable living trusts can save time, money and hassle for your heirs. Additionally, revocable living trusts can allow you to appoint a professional trustee, or co-trustees, to manage and invest the trust property in a better way than you could do on your own.

Co-Trustees

Co-trustees must work together and agree on how to manage, invest and disburse trust property. Appointing co-trustees can be more protective, but it can also inhibit action because consensual decisions are required.

Revocable

When a trust is revocable, the trustor can put an end to the trust and reclaim the property being managed by the trustee or co-trustees at any time. The disadvantage of a revocable living trust is that it does not provide any income tax savings.

Living

A living trust exists while the trustor is still alive. This differs from a "testamentary" trust, which is created under the terms of a deceased person's will.

Source:

Nolo's Make Your Own Living Trust; Attorney Dennis Clifford; 2009