Trusts can be broadly categorized as revocable or irrevocable. Revocable trusts are commonly referred to as living trusts because the grantor, or person who creates and funds the trust, can retain control over the trust their entire lifetime.

When the grantor creates the trust, the trust itself will become the legal owner of the property in the trust. However, the grantor may specify that they are the sole beneficiary of their trust assets throughout their lifetime. In this case, the grantor retains beneficial ownership of the property in the revocable trust throughout their lifetime.

What Is a Revocable Trust?

A revocable or living trust is a trust that a grantor creates in their lifetime. The grantor then funds the trust with property and assets. At this point, the trust becomes the legal owner of the trust assets.

Revocable trusts are commonly used to transfer accounts and property from one generation to the next without going through the probate process.

A key point about a revocable trust is that the grantor can change, modify, or even cancel the trust throughout their lifetime. They can name themselves as the trustee and, therefore, have full management rights and responsibility over the assets in the trust.

Who Owns the Property in a Revocable Trust?

Legally, the trust holds title to any property in the trust. Once the grantor funds the trust, the trust becomes the legal owner of the property. The property is titled in the name of the trust.

Even though the trust legally owns the property in the trust, the grantor can retain beneficial ownership throughout their lifetime. This means that the grantor can still control how the property is used. For example, if a grantor places their home in a revocable trust, they still have the full right to live in the house, sell it, or pass it on to their heirs.

When the grantor establishes the trust, they can name a successor trustee. When the grantor dies, the trust becomes irrevocable, which means it can no longer be changed or modified. The successor trustee is responsible for following the instructions in the trust document for distributing assets to the beneficiaries, who become the legal owners of the property.

Pros and Cons of Holding Property in a Revocable Trust

One of the biggest benefits of creating a revocable trust is the ability to pass assets to heirs without going through the probate process. Many people value their privacy and do not want their personal business to become a public record. The probate process can be expensive and delay the distribution of assets to heirs.

Revocable trusts also make it possible for grantors to ensure the property held in their revocable trust is distributed the way they intended, should they become incapacitated. If a grantor can no longer manage their trust, the successor trustee will take over for them.

Because a grantor can maintain control over the revocable trust, this type of trust does not provide the same potential asset protection benefits against creditors that an irrevocable trust can offer. When using an irrevocable trust, the grantor funds the trust and appoints a trustee. The grantor no longer has the right to manage the assets in the trust. However, they can still be a named beneficiary of the trust.

Likewise, a revocable trust does not provide the same potential tax benefits as an irrevocable trust. When using a revocable trust, income tax responsibilities pass through the trust to the grantor, who is responsible for paying them.

There are many different types of trusts, and they can be very complicated. To ensure a trust is the proper legal instrument to serve your purposes, talk with a Katzner Law Group estate planning attorney.

Frequently Asked Questions
What can a grantor place in a revocable trust?

The grantor can fund the trust with just about any asset they want. Examples of assets that can be placed in a trust include:

• Homes
• Real estate
• Jewelry
• Art
• Valuables
• Accounts
• Stocks and bonds

What assets should a grantor not place in a revocable trust?

The following assets do not belong in a revocable trust:

• Social Security benefits
• Health savings accounts
• Medical savings accounts
• Retirement accounts
• Life insurance policies
• Motor vehicles
• Cash

Can someone take my trust if it’s in a revocable trust?

If someone wins a legal verdict and places a lien against your property, a revocable trust will not provide asset protection from creditors. With a revocable trust, a grantor retains control over the property in the trust and, therefore, can pay their creditors.

Who controls the money in a revocable trust?

During the grantor’s lifetime, they commonly serve as the trustee and will manage their trust.

The grantor will specify a successor trustee (trust manager) to take over managing the trust upon the grantor’s death. The successor trustee can be an individual, bank, or trust company.

The trustee has a fiduciary responsibility to manage the accounts and property held in a revocable trust. They will distribute the property in the revocable trust to the beneficiaries. They are also responsible for keeping accurate records of all transactions they make, completing tax forms, recording income and expenses for the trust, and managing the assets in the trust for the benefit of the beneficiaries.

What’s the best trust to put your house in?

If you want to protect your assets from potential creditors and lawsuits, talk with your estate planning attorney about creating an irrevocable trust. Once you fund your irrevocable trust with your house and other assets, they are no longer considered to be your personal property and, therefore, are not used to pay your creditors.

Your Katzner Law Group estate planning attorney can help you consider all your options and develop a plan that meets your needs. We have extensive experience in estate planning.

You can schedule a call with us or reach out to us directly at 855.631.3457 to learn more about how best to plan today to protect those most important to you.