There are two basic types of revocable living trusts for you to consider as a part of your estate plan.
Self Declaration Revocable Trust
The first is the so-called self-declaration of trust. With this type of living trust, the grantor in the trust document declares that he or she is holding property as trustee for the beneficiaries. Frequently, the grantor, trustee and main beneficiary is the same person—the client who establishes the trust. Of course, the trust provides for successor trustees upon the incapacity or death of the Grantor Trustee. Such a self-settled trust also provides for successive beneficiaries after the death of the Grantor.
Third-Party Trustee Revocable Living Trust
The second type or revocable living trust is one in which property is transferred to another person or entity (e.g., a corporate trustee) for the benefit of the Grantor, who is the primary beneficiary during his or her lifetime with successive beneficiaries receiving the benefits of the trust upon the death of the Grantor. Frequently, the Grantor and the Grantor’s spouse serve as the Co-Trustees in this type of third party trustee living trust arrangement.
During my years at the University of Iowa law school in the mid 1960s, we referred to this estate planning device merely as a revocable inter-vivos trust. Subsequently, attorneys, including Kansas City estate planning attorneys, begin to use the term “living trust” to describe it because the trust becomes operative immediately upon its establishment during the lifetime of the Grantor (although it can still be changed or revoked during the Grantor’s lifetime assuming the Grantor has the mental capacity to do so). In sharp contrast, a will does not become operative until after the death of the testator (the person who executed the will during his or her lifetime).
If you’d like to explore the best options for your estate planning needs, contact our office through the form below or call us at 816-561-5000.
*This post was originally published on September 11, 2011
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