About Revocable Trusts
As the name implies, a revocable trust can be broken by the person who set it up. Under this arrangement, a person arranges to turn over certain property to a trustee who will perform certain duties that are outlined in ther agreement.
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Function
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A revocable trust can be set up for many reasons. First, it is an instrument by which a person can empower someone else to invest the money placed in the account. This is a very helpful for someone looking for professional investment advice. Second, a person may set up a revocable trust and retain the right to invest, but have the trustee perform certain duties in the event of his incapacity. This is useful for someone of advanced age who is concerned about how things will be managed if he should become infirm. Also, a revocable trust acts as a will if the person dies while it is in effect. The person's estate benefits by passing the property according to his wishes, but it avoids the cost of probate relative to the trust's assets.
Features
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The trustee of a revocable trust can perform as many duties as are granted in the agreement. The trustee can have unilateral control over the investments in the account, or he must consult with the person before buying and selling securities. A trustee may be empowered to dispense the income to the person, or to someone designated by him. A trustee can even pay the person's bills. Usually quarterly, the trustee is obliged to provide the person with a statement of activities and the updated value of the trust. Essentially, the trustee can be given as many or as few powers as the person may direct, and he can terminate the trust or replace trustees whenever he wishes.
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Misconceptions
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Many people believe that a revocable trust is necessary only if you have great wealth or are a senior citizen. In reality, many people much younger and with fewer assets have set up a trust because they are too busy to manage their assets correctly, and they want someone else to oversee the conduct of their personal business. Also, do not forget that, if you should die, you can have the assets remain in trust for someone else's benefit or distribute them, according to your wishes. By doing so your estate will avoid the cost of probate.
Size
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The more assets you may have to put in your revocable trust, the more seriously you should consider the type of investment advice you should have. For instance, if your affairs are relatively uncomplicated, you can name your attorney as trustee. But as your estate builds in size, the Trust Department of a bank is where many people gravitate because it is set up to do whatever is called for, including providing professional investment advice or direction.
Warning
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Not all bank trust departments have a particular good track record in managing other people's assets in a revocable trust. Often, they pay greater attention to the largest accounts placed there. If you are looking for a professional approach, shop around before making your decision.
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