Living trusts, revocable trusts, etc. trusts all share similarities in either meaning or functions as well. Revocable trusts are part of Living Trusts that’s why abbreviated as RLT which means Revocable Living Trust. Let us know Abbreviation For Revocable Trust.
It is a type of trust in which a grantor, establishes a trust for its beneficiaries with the trustee;’s help. Trustees are responsible for the management of the trust. Revocable trusts or RLT i.e., Revocable Living Trust can either be amended or revoked. The grantor of the trust means the person who is the owner of the assets can make changes.
Revocable Living Trust (RLT)
Revocable Living Trust is a trust that can be funded by trustees during the lifetime of the grantor or even after the death of the grantor. These kinds of trusts offer flexibility as compared to the other ones in setting the terms for the execution.
The Revocable Trust covers a range of assets accessible during the grantor’s life & after that as well. They are different from irrevocable trusts as Irrevocable trusts “lock” funds. Basically –
- The Revocable Trust is created by individuals.
- After the owner’s death, trustees are responsible to manage the assets.
- In simple words, it is a kind of will or may be substituted as a will that defines how your assets will be distributed after your death.
- Assets include; bank accounts, investments, property, and valuable possessions.
- It can be revoked or changed at any time as specified in the name.
How to Create a Revocable Living Trust?
The Revocable Trusts or Revocable Living Trusts are the trusts which can be funded even after the death of the grantor. There are 03 main persons or parties or individuals responsible for creating a revocable trust known as the Grantor, the trustees & the beneficiaries. They are as follows:
Grantor
- A grantor is a person who is referred also to as a settlor or trustor.
- He owns an estate & has the right to transfer the property
- he also has the right of giving assets to the trust’s beneficiaries after his death.
- The grantor is the person who is mainly responsible for making the most critical & important decisions.
- A revocable trust may turn into an irrevocable trust, after the death of the grantor.
Trustee
- The trustee is the person who is responsible for managing the trust & mang some important decisions.
- It included; investment decisions, managing trust’s funds, and paying trust fees.
- It can be done by any individual or an organization.
- The grantor can be the trustee as well
Beneficiary
- The beneficiaries are the individuals or any person who after the grantor’s death get the trust’s proceeds.
- the beneficiary can be the grantor’s siblings or any organization.
Important terminologies in Revocable Living Trust
There are some parties & terminologies to the trust other than the main parties to the trust. These may be directly or indirectly related to the Revocable trust. These are named as below-
Guardian
The Person who is in charge of a minor, after the demise of their legal & biological parents.
Inter Vivos
The prefix is used for the name of a trust to show what type of trust it is.
Inheritance tax
Tax on the property that is inherited.
Codicil
It is a type of type. When an amendment to the will is made. This document is used.
Executor
The Person chose to distribute the asset after the demise of the grantor.
Probate
Legal procedure, which specifies the legal hires of the beneficiaries. A Revocable Trust avoids Probate.
Estate tax
Tax paid by the beneficiaries or the trustees after the demise of the grantor upon the estate/trust’s value.
Conclusion
A living trust may be Revocable or Irrevocable. The Revocable one is called the Revocable Living trust. It is abbreviated as the RLT. The Revocable trusts are flexible & revocable & can avoid probate. It establishes the privacy of the assets as well as the person associated with the trust. But there are no immediate tax advantages.
Frequently Asked Questions
- What is an RLT?
Answer- RLT is Revocable living trusts are a type of living trust. In which a grantor, with the help of the trustees, establishes a trust for the beneficiaries. The grantor may be the trustee as well.
- How does an RLT differ from an Irrevocable Trust?
Answer- In Revocable living trusts funds are managed by the trustees after the grantor’s death, but in Irrevocable trusts funds are “locked” during the demise of the grantor. That is why they both are different.
- Can an RLT replace a will?
Answer- Yes, maybe because the Revocable trusts are also sometimes referred to as will. As because the RLT can be used to allocate property and assets in place of wills.
- Is an RLT can avoid Probate?
Answer- Yes, A revocable trust can avoid probate a legal procedure, which specifies the legal hires of the beneficiaries. As it also can be substituted for the owner’s will after his/her demise.
