• (405) 447-9455
    447-WILL
  • (972) 948-7878
    94-TRUST

FAQs

What do the terms Grantor/Settlor, Trustee and Beneficiary mean and what are their responsibilities?

The Grantor/Settlor is the person who sets up the trust. It is generally also the person who funds the trust. The Trustee is the person who is responsible for administering the trust, investing the assets and handling any of the administrative duties that need to be performed. Finally, the Beneficiary is the person who benefits from the trust. A Revocable Living Trust is typically set up so that the client assumes all three roles and the respective duties of each role. In other words, generally, with a revocable trust, you are the person who sets up the trust; you are the trustee who administers the trust during your lifetime; and you are the one who receives the income and benefits as a beneficiary of the trust during your lifetime.

What is a Revocable Living Trust?

A Revocable Living Trust is a type of living trust in which the settlor retains the power to revoke, alter, amend, or terminate the trust.

Why should I use a Revocable Living Trust versus a Will?

A Revocable Living Trust allows you to avoid probate and seamlessly manage your assets if you become incapacitated. It also helps you and your family avoid the complications and expenses of a guardianship proceeding in the event that you are unable to manage your affairs. A Revocable Living Trust can provide for disposition of the trust property on the settlor’s death and thus serve as a substitute for a Will. That being said, it does not wholly replace your Will; any good estate plan with a Revocable Living Trust will also utilize a Pour-Over Will to mop-up or “pour-over” any assets not held in trust.

How does my Revocable Living Trust function?

During the settlor’s lifetime, a Revocable Living Trust can pay all of the income made by the trust to the settlor. The principle is also available to the settlor as needed or requested.  Upon death, a Revocable Living Trust will distribute trust assets pursuant to the settlor’s distribution plan in a manner similar to a Will.

What exactly are the benefits of a Revocable Living Trust?

A Revocable Living Trust can manage the trust property, uninterrupted by incapacity. Through proper planning and funding, a Successor Trustee can seamlessly step in and manage all trust property in the event that you are unable to manage your affairs. Through the use of a Revocable Living Trust, the complications and expenses of a guardianship proceeding can be avoided. Another major benefit of the Revocable Living Trust is that it avoids probate, as well as the time delays, aggravations, and expenses associated with the probate process. If you have property in more than one state, a Revocable Living Trust can also avoid additional probate proceedings in those states. Finally, a Revocable Living Trust offers privacy at death that the probate process cannot otherwise provide.

Are there disadvantages to a Revocable Living Trust?

A Revocable Living Trust does not eliminate all costs. There are legal fees and other incidental expenses associated with establishing a trust. These costs are incurred immediately and not deferred until death, as would be the case with probate. In addition, incidental expenses may be incurred for funding or retitling of assets depending on your situation. There may also be fees for a Trustee who is allowed a commission for managing the trust. Trustee compensation is generally waived and not taken because in most cases the trustee is a family member who is also an ultimate beneficiary of the trust.

What are the tax consequences of having a Revocable Living Trust?

During the settlor’s lifetime, the settlor will not see any tax changes. The trust uses the settlor’s social security number and all income is reported on the settlor’s income tax return. All trust property is still considered a part of the settlor’s taxable estate for estate tax purposes; but proper planning with a Revocable Living Trust can minimize estate taxes, especially between married couples that utilize the exemptions allowed by law.

How do I change or alter a Revocable Living Trust?

To amend or alter a Revocable Living Trust, the settlor must have formal papers prepared to reflect any changes. If you decide that you want to change or amend your trust, you should contact your attorney to properly execute any changes.

How do I revoke or terminate a Revocable Living Trust?

The settlor must have formal papers prepared to revoke or terminate a Revocable Living Trust. If you decide that you want to revoke or terminate your trust, you should contact your attorney to ensure that the trust is properly revoked or terminated.

What happens to a Revocable Living Trust upon the settlor’s death?

Upon the settlor’s death, the trust becomes irrevocable and can no longer be amended. All of the assets held in trust will still be considered a part of the settlor’s estate for tax purposes, and the Trustee or Successor Trustee will take over duties and distribute the assets according to the terms of the trust. A Trustee may also be responsible for some miscellaneous tasks, such as insuring that a final tax return is prepared and upon distribution of the trust that a final accounting has been done. It is a good idea for the Trustee to contact an attorney to ensure that all things are properly concluded at death.

If I have a Revocable Living Trust do I still need other estate planning documents?

Yes! A Revocable Living Trust is only one part of your estate plan. In additional to a Revocable Living Trust and other ancillary documentation, a complete estate plan typically includes a Pour-Over Will, Durable Power of Attorney, Healthcare Power of Attorney, HIPAA Authorization, and Advance Directive or Living Will.

How important is the titling of property with respect to my plan?

Retitling property into the name of the trust is a very important part of your estate plan. Without properly retitling the assets into the trust, you will not be able to avoid probate. Moreover, your estate plan may not function correctly if property is not titled correctly. For example, if you intend for a certain bank account to be distributed through the trust, but it is still owned jointly, then when you pass away, that property will not be distributed pursuant to the trust. It will instead pass directly to the joint owner of the account.


Oklahoma Office
2230 McKown Drive
Norman, Oklahoma 73072

Tel:
(405) 447-WILL
(405) 447-9455

Texas Office
P.O. Box 190406
Dallas, Texas 75219


Tel:
(972) 94-TRUST
(972) 948-7878