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Revocable Living Trust while living
Posted on 5/31/23 at 8:08 am
Posted on 5/31/23 at 8:08 am
I have a family member that wants to setup a revocable trust for a non blood relative beneficiary who is a minor. The family member setting it up would be trustee and I would be the successor trustee. The plan is to give money/assets to the minor as needed at life events... college, marraige, etc then the balance after a certain age. All the while, the trust will also give money as-needed for car, housing, etc.
My main question is, what is the purpose of revocable trust while the trustee is living? If the trustee is going to be cutting checks while living, whats the difference from revocable trust and will?
Edit: spelling is hard
My main question is, what is the purpose of revocable trust while the trustee is living? If the trustee is going to be cutting checks while living, whats the difference from revocable trust and will?
Edit: spelling is hard
This post was edited on 5/31/23 at 8:39 am
4
Posted on 5/31/23 at 8:24 am to AutoYes_Clown
You need to talk to a trust and estates lawyer, mainly because you’re calling it a recovable living trust instead of a revocable living trust.
Posted on 5/31/23 at 8:30 am to JonTigerFan11
thanks Im not the one setting it up. Not sure how much I would be discussing it
Posted on 5/31/23 at 8:42 am to AutoYes_Clown
OP. There are a ton of YouTube vids on this topic. Hit up a few. At a high level a revocable living trust allows changes to the trust while living. A irrevocable does the opposite; however, I may not be 100% accurate in this.
Typically a trust is set up for the very reasons you stated in your initial post. They also do it to avoid probate court. There may be some tax avoidance opportunities as well; however, that's where I'll leave my thoughts to the experts.
I'm considering this as well and have taken some calls with the experts to discuss. It's a lot of paperwork, but from your post that's not on you to carry that burden.
Typically a trust is set up for the very reasons you stated in your initial post. They also do it to avoid probate court. There may be some tax avoidance opportunities as well; however, that's where I'll leave my thoughts to the experts.
I'm considering this as well and have taken some calls with the experts to discuss. It's a lot of paperwork, but from your post that's not on you to carry that burden.
This post was edited on 5/31/23 at 9:01 am
Posted on 5/31/23 at 8:51 am to AutoYes_Clown
Answering your main question, it's a revocable trust while the donor is alive. If the donor is the trustee, then the donor, who is understood to also be the trustee here, can revoke contributions if necessary during their life.
As you state that the donor will be cutting checks, the donor can cut checks to the trust for the purpose of passing on these assets at their death.
The trust becomes irrevocable at the donor's passing.
This is my understanding. I am not an attorney.
As you state that the donor will be cutting checks, the donor can cut checks to the trust for the purpose of passing on these assets at their death.
The trust becomes irrevocable at the donor's passing.
This is my understanding. I am not an attorney.
Posted on 5/31/23 at 11:40 am to AutoYes_Clown
quote:
I have a family member that wants to setup a revocable trust for a non blood relative beneficiary who is a minor. The family member setting it up would be trustee and I would be the successor trustee. The plan is to give money/assets to the minor as needed at life events... college, marraige, etc then the balance after a certain age. All the while, the trust will also give money as-needed for car, housing, etc.
What is the age of majority in the state where the beneficiary lives? It sounds like a lot of this gifting might happen after the age of majority.
What you are saying is desired, I don't think a trust is necessary for> There seems to be no estate planning need. There does seem to be a control desire, but if the person funding is the same person who is deciding when the beneficary can access the funds... why doesn't the "grantor" just wait and give the money at the time when he wants the beneficiary to receive it? A revocable living trust is taxed the same as if the assets were personally held, so any investment gains are the grantor's either way.
A revocable living trust can have some benefits in avoiding probate, and that again depends on the state. Some places have more complex probate issues than others.
A will determines what happens to assets after death. It has nothing to do with gifting while alive.
For the record, the trust attorneys on here will probably throw darts at me, but I see way too many people with trusts that don't need them / they provide no real value.
there may be some factors you haven't listed, so I would definetly invest an hour or two with a professional. Start with "this is what I want to happen" not "I need a trust" and go from there.
Posted on 5/31/23 at 3:20 pm to LSUFanHouston
More people get talked into trusts than should be doing them. They can be useful is special situations but most of the time it’s attorneys that are making the money off of them who is encouraging them to be setup. I’m not saying this isn’t a special situation but try to talk to someone that doesn’t have a financial interest in it before setting it up.
Posted on 5/31/23 at 6:17 pm to LSU1018
Meh, I’m a big proponent of RLTs. Probably because I talk to OT ballers all day.
To answer OPs question, the donor is probably setting up a trust for the minor instead of an UTMA account because the donor can control the funds after the minor reaches the age of majority.
To answer OPs question, the donor is probably setting up a trust for the minor instead of an UTMA account because the donor can control the funds after the minor reaches the age of majority.
Posted on 5/31/23 at 8:03 pm to MSTiger33
As long as they are still alive, they would still be able to control the funds. If they die, they could write in their will their wishes for the money.
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