A Living Revocable Trust is a legal document that resembles a Will. It contains an individual's instructions for his or her assets in the event of disability and directions for the distribution of assets upon death. After the Trustor creates the Trust, they change the title on their assets from their name individually to their name as Trustee of their Trust. During the Trustor’s lifetime, assuming no disability, they control the assets in this Trust. The Trust does not have to file a tax return or pay taxes. The same 1040 tax return they file every year is the same one they use once the Trust has been established. Their social security number is attached to all the assets and the IRS makes no distinction between them individually and them as Trustee of their Trust for tax purposes. They act as their own Trustee, thus eliminating any professional fees. They can do anything with their assets that they want. They retain the same control over their assets as they did before the Trust was established.
The advantage of a Living Revocable Trust is that the assets in the Trust owned by the Trustor as Trustee of their Trust do not go through probate upon their death. Therefore, if all of their assets are in a Living Revocable Trust when they die, they completely avoid probate. The assets are disposed of more quickly - often at less administrative cost. The Successor Trustee is not required to print the public death notice in the newspaper as the Personal Representative may be required to do in probate.
A Living Revocable Trust provides the perfect vehicle for managing the Trustor’s assets in the event of their disability. A Will, which functions only in the event of death, carries no such benefit.