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A revocable trust is a trust that can be changed at any time or canceled if the grantor desires. They are also referred to as living trusts, or revocable living trusts. If you decide to change or alter your revocable trust, you will need to do so through a trust amendment, where you can change the terms of your trust.
This would be used when you are changing or adding beneficiaries, or changing the amounts your beneficiaries receive in addition to other terms in the trust. You can also do what is called an amendment and restatement, which means everything about the revocable trust, is changed or just canceled in full.
Some reasons that one may use a revocable trust are to allow for changes to be made due to unforeseen circumstances. You never know what life has in store, and sometimes things happen that change the course of the future. When you have a revocable trust, you can make changes to allow for these circumstances.
Revocable trusts also aren’t able to be touched by probate which many people prefer. The assets will go directly to the beneficiaries and not enter into the probate process at all. In addition, your trust details are kept private and not made a part of public record for the world to see. That also means your beneficiaries’ privacy is kept intact. This is important to many people that set up trusts, especially if they have substantial value.
Some down sides of revocable living trusts to consider is that because they can be changed at any time, any monies you put into them are still counted as your personal property. This means that these funds can still be hit by any creditors you may have, and are subject to estate taxes. Revocable trusts offer the trust no protection from creditors if you are sued for any reason, and it can be taxed by both federal and state taxes at the time of the grantor’s death. After the death of the grantor, the trust then becomes an irrevocable trust, meaning the terms can’t be altered in any way.
Even though there are some risks involved in having a revocable trust, if you are unsure of anything you are putting in the trust, such as the spouses of children, or a similar situation, you may feel more reassured by the fact that the trust can be changed if something happens. Having this control over your future division of the funds you are saving for the future of your loved ones should anything happen to you.
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