Andrew Hook talks to Stretcher about revocable living trusts
In an interview for Stretcher.com, Attorney Andrew Hook explains the meaning of a revocable living trust by dividing the term into its main parts: “revocable,” “living” and “trust.” He describes a revocable living trust as a legal agreement in which a person, who is referred to as the “settlor” or “grantor,” transfers property to a trustee, who manages the property for the benefit of specific beneficiaries. You can consider the trust agreement to be a list of directions from the settlor to the trustee regarding the way in which the trustee will manage the property.
The “living” part of the term, “revocable living trust” signifies that the trust was drafted while the settlor was alive. This concept can also be described by the term “inter vivos.” The “living” element of the trust is that it is not “testamentary,” which means that a trust was created under a will, or arose upon the death of the settlor. The advantage of a living trust over a testamentary trust is that a living trust is established during the settlor’s lifetime, and the terms of the trust may dictate that the trustee manage the administration of the trust property in case the settlor becomes incapacitated or dies. However, a testamentary trust only applies upon the settlor’s death, and thus, it will not become effective in the event of the settlor’s incapacity.
The “revocable” part of the term “revocable living trust” means that the trust can end or be modified if the settlor has capacity, and wishes to terminate or make changes to the trust. If a trust is terminated or revoked, the trust property will be placed back into the name of the grantor. The trustee has a legal duty to manage the trust property for the best interests of the trust beneficiaries. If a trustee cannot serve, another person assumes the role of trustee, and manages the property. Therefore, if the grantor is able, the grantor resumes control of the trust property. If the grantor loses capacity or dies, the trustee will take over management of the property, thereby avoiding court intervention.