RLT stands for Revocable Living Trust in legal terms. This can save your family emotional stress and financial grief by not having to wait for probate after your death. Generally, court challenges to wills are rare. If there is a lawsuit having a living trust is a lot more difficult to attack than a will. This is due to the nature of a living trust because you continue to take action with the properties within this trust it demonstrates that you are competent.
Understanding what a trust is will help with the terminology involved when talking about RLTs. Trust are simply legal entities that hold titles to different assets for a living person. You may see these used as a supplement to a will or as an alternative to a will. A living trust is created as either a revocable or irrevocable, and each type of inter-vivos trust has a specific purpose.
A revocable living trust or RLT is a trust that you create during your lifetime. When you feel changes are necessary you control what happens and make changes to the trust. This can be done as long as you are not incapacitated or dead. You will also hear this type of trust referred to as a living trust, or an inter vivos trust.
An RLT is different from irrevocable living trusts when it comes to the ability to alter the trust. Irrevocable living trust are much more difficult to alter after they have been written. There are some potential ways that may allow limited changes only. This is generally only possible if it has been written into the terms of the trust. Asking a court to order changes or by shifting trust assets into a new trust.
Terms to Know
- Beneficiary – living person or charity benefited by the trust, but who does not have legal title to the money or property in the trust.
- Grantor, Settlor or Trustor – person that creates the trust and decides how it will operate and while including what property or funds is included in the trust.
- Trustee – person named to oversee the trust for managing and investing property or funds as indicated in the trust by the grantor.
- Trust agreement – the grantor sets up instructions in writing for fund and property handling and distribution. Generally, the grantor will also name a successor trustee in a trust agreement if by chance the trustee becomes incapacitated or dies.
Note that the grantor with an RLT is the initial trustee and primary beneficiary. You need to
understand that the tax identification number for the RLT is the grantor’s social security number and income earned by the trust itself will be taxed as the grantor’s personal income.
There are many pitfalls and areas to cover when having a Revocable Living Trust. Areas to be reviewed covering spouse of partner part in the RLT as well as some state laws may change how this type of trust is handled. Having an attorney that is familiar with all aspects of trust funds can save you time and money. Call today to schedule an appointment we look forward to discussing this or any of your other estate planning needs you may have.
