Revocable trust

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Revocable trust

A trust that may altered as many times as desired in which income-producing property passes directly to the beneficiaries at the time of the grantor's death. Since the arrangement can be altered at any time, the assets are considered part of the grantor's estate and they are taxed as such.

Revocable Trust

A trust that the trustor may terminate at any point prior to his/her death. A trust relationship in which one party, known as the trustor, gives to a person or organization, known as the trustee, the right to hold and invest assets or property on behalf of a third party, known as the beneficiary. Most trusts exist to provide for the financial future of a minor child or mentally incompetent person, or may benefit charitable organizations. Many trusts are exempt from taxation on money given to the beneficiary, but because revocable trusts may be terminated, they are considered part of the trustor's estate and are thus subject to estate taxes.

revocable trust

A trust that may be terminated by the grantor or that is set up to terminate automatically at a specific date. Revocable trusts are often used to turn daily decisions regarding certain assets over to someone else. They are also used to reduce probate fees, to reduce delays in distributing assets, and to keep assets from becoming a matter of public record. A revocable trust—an important estate-planning tool—may serve to reduce federal estate taxes but generally will have no effect on income taxes. Compare irrevocable trust.

Revocable trust.

A revocable trust is a living trust that can be modified or revoked by the grantor, or person who establishes the trust and transfers property to it.

The trust can be a useful estate-planning tool because, when you die, the assets in the trust pass directly to the beneficiaries you've named in the trust rather than through your will.

But because you haven't relinquished control over the assets, as you do when you transfer them to an irrevocable trust, they are still included in your estate. If its total value, including the trust assets, is greater than the exempt amount, federal or state estate taxes may be due.

For the same reason, during your lifetime, you continue to collect the income that the assets in the revocable trust produce, and you owe income or capital gains taxes on those earnings at your regular rates. That's not the case with an irrevocable trust, which has its own tax identity.

References in periodicals archive ?
Revocable trusts operate outside of the probate court.
For example, most revocable trusts will contain an expense clause similar to the following:
Paul's practice centers on revocable trusts, which not only direct her clients' desired asset distribution without the cost and complexity of probate or other court-monitored administration, but also provide for the person's care and asset management in the event of illness or incapacity.
Eligibility for estates, heirs and qualified revocable trusts to exclude gain from the sale of a primary residence, applicable to estates of decedents dying after 2009.
A one-page document titled "Request for Determination of Tax and Discharge of Personal Representatives and Trustees" for any revocable trusts under Regs.
Cowles Legal Systems' Trust Plus creates wills, irrevocable trusts, and revocable trusts, including funding documents, state-specific supporting documents such as powers of attorney (financial and health care), deeds, etc.
Power of attorney documents and revocable trusts should be viewed as companion directives to wills, not replacements for them, Lawson says.
California Master Trust offers revocable trusts, which allow funds to be removed for personal reasons, and irrevocable trusts, in which the funds are inaccessible until needed for the funeral.
Revocable trusts have major advantages, ensuring the continuity and financial security individuals desire as they face incompetency.
The city of Sherwood entered the ownership in September 2008 after a $5 million eminent domain action against the namesake revocable trusts of James and Betty Rodgers and two other Rodgers-led entities: Club Properties Inc.
645 relating to the election for certain revocable trusts to be included for income tax purposes as part of the deceased grantor's estate, and not as a separate trust (67 F.
Once an election is made, a QRT can take advantage of the differences between the income tax treatment of estates and revocable trusts, as follows: