Revocable trust

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.
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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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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.

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Therefore, probate avoidance applies to other types of assets if they are held in a revocable trust. To get this benefit, assets must be transferred into the trust.
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A will can direct assets to a testamentary or revocable trust and managed for the benefit of beneficiaries to help a client achieve longer-term goals.
She had previously created a revocable trust (the payor) that was later amended by her court-appointed conservator to allow funds to be used for premium payments for life insurance owned by three dynasty trusts (also formed by her conservator) under an economic benefit split-dollar arrangement.
The simplest difference between the two is that assets remain in the grantor's estate in a revocable trust but move out of the estate in an irrevocable trust.
In the Morey decision, life insurance proceeds--which are generally exempt under Florida law from claims by the insured's creditors--were paid to the insured's revocable trust that contained a clause directing that all of the insured's debts were to be satisfied with trust assets.
However, this treatment is only extended to a qualified revocable trust, generally referred to as a living trust, for two years after death.