In the realm of estate planning, individuals are often presented with a myriad of options to ensure their assets are managed and distributed according to their wishes. One such tool that has gained significant popularity in recent years is the revocable living trust.

What is a Revocable Living Trust?

A revocable living trust, also known simply as a living trust, is a legal entity created to hold ownership of an individual’s assets during their lifetime and to distribute those assets upon their death. Unlike a will, which only becomes effective upon death and must go through the probate process, a living trust allows for the management and distribution of assets both during life and after death without the need for probate.

How Does a Revocable Living Trust Work?

The process of creating a revocable living trust begins with the individual, referred to as the grantor, establishing the trust and transferring ownership of their assets into it. The grantor then designates a trustee, who is responsible for managing the assets held within the trust according to the terms outlined in the trust document. In many cases, the grantor serves as the initial trustee and retains full control over the trust during their lifetime.

One of the key advantages of a revocable living trust is its flexibility. As the name suggests, the grantor has the ability to make changes to the trust or even revoke it entirely during their lifetime, provided they are of sound mind. This flexibility allows individuals to adapt to changes in their financial or personal circumstances without the need for costly and time-consuming legal proceedings.

How to Properly Maintain an RLT

For 25 years, I had the authority to write checks and make transactions on an established joint revocable trust bank account on which I served as a successor trustee. Following my mother’s death, the account was restricted because my account profile was not up to date and needed to be refreshed before I could be restored on the account.

From a long and tedious experience rectifying this issue, I learned the importance of ongoing maintenance and status checks for any RLT accounts that name a trustee or trustees other than a spouse. A few maintenance items to keep in mind:

  • Refresh the bank profiles of all trustees every three years.
  • Request bank confirmation that all required trust documentation is on file.
  • Confirm what conditions will allow continuous account operation with no interruption upon the death of the primary account holder trustee.

As the banking industry continues to contract, there is a high probability that account information could go missing from any bank and/or its successor in a takeover transaction.  For advisors, attorneys and anyone involved, it would be prudent to recommend that clients regularly confirm the status of any Revocable Living Trust account naming non-spouse successor trustees.

RTD specializes in Trust Investment Management and works closely with individuals to develop and maintain high-impact investment plans that meet the varying and often complex needs beneficiaries. Ensure the needs and aspirations of your loved ones by working with an experienced, dedicated team. With formal training in serving as a fiduciary, for fiduciaries, we specialize in working with families and trusts like yours.