What is a revocable trust
A revocable trust is a type of trust structure that is used where the settlor (person wishing to establish the trust) wants to retain the right over the trust during his/her lifetime. A revocable trust is therefore also known as a living trust. When deciding to establish a revocable or living trust it is advised that you seek the guidance from a professional consultancy firm in order to gage a clear understanding of the benefits and restrictions this particular type of trust incurs.
For more information on the different trust structures available, or to find out how DeltaQuest can assist you with your trust requirements, please Contact DeltaQuest.
Revocable trusts explained
A revocable trust as mentioned allows the settlor to retain all rights over the trust with regards to amending, changing and revoking or terminating the trust where he/she deems appropriate. However, these rights are only enforceable by the settlor during his/she lifetime.
The characteristics of a revocable trust mean that it is typically established to the purpose of avoiding probate. In essence, when the settlor dies, the assets held in the revocable or living trust will then be distributed as stipulated to the nominated beneficiaries.
A revocable trust becomes an irrevocable trust once the settlor dies, meaning that no changes or alterations can be made to the trust.
One of the main attractions to establishing a revocable trust is that the settlor has the right to amend how the assets will be distributed and who will receive the assets according to difference circumstances arising in his/her lifetime. This subsequently gives the settlor a great level of freedom and flexibility in determining how his/her wealth will be passed on.
A revocable trust also has the added benefit of being protected once the settlor dies – this means that the trust, assets and the beneficiaries cannot be changed once the settlor dies and so it will provide a sense of peace of mind to the settlor.
It should be noted that establishing a revocable trust will not replace the requirement for a ‘will’.
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