REVOCABLE LIVING TRUST

Revocable Living Trust

A Living Trust is a legal instrument made during your lifetime that accomplishes transfer of ownership of your property to an entity called a trust.  The property is usually held by one person for the benefit of another, in this case you for yourself.  The person creating the trust is called the Grantor or Settlor.  The person who manages the Trust property is called the Trustee and the person who receives benefits from the Trust is called the Beneficiary.

            A Living Trust takes effect during your lifetime, hence the term “Living Trust.”  A Testamentary Trust takes affect at the death of the Grantor.  In a typical Living Trust, the Grantor transfers property into the Trust, names himself as Trustee or Co-trustee, and names himself as sole Beneficiary with the right to withdraw income and principal at will.  Upon the Grantor’s death, the Trust Agreement names a successor Trustee who takes over administration of the Trust.  The successor Trustee oversees payment of claims and prompt distribution of the assets or continues to hold the property in trust.  This type of trust is appealing for many reasons:

• the Grantor retains control of the property;

• the property does not go through probate upon the Grantor’s death;

• it avoids multiple probates if property is owned in several states;

• it can reduce or eliminate estate taxes; and

• the Trust provides a convenient method of naming a successor Trustee and prevents court control of assets in the event the Grantor becomes disabled or incapacitated.

            Many people like a Living Trust because it is not subject to the probate process at the death of the Grantor.  Probate is the legal process through which the court makes sure that a Will is legally valid, debts are paid and assets distributed.  It also allows for the title of an asset to be changed to another person.  The more complicated Probate process can be avoided in Arkansas, in some cases, with an estate valued at $100,000 or less.  It requires a petition be filed and small fee be paid to the probate court.