Purpose of a Revocable Trust

A revocable trust may protect your assets from creditors.

A revocable trust may allow its creator ("settlor") to plan for his death or incapacity, or to protect the assets from creditors. For answers to specific questions about revocable trusts, contact an attorney.

Revocable Trusts

A revocable trust, also called an inter vivos trust, allows a settlor to place assets in the hands of a trustee. The trustee manages the assets, usually on behalf of another party, a beneficiary. Sometimes the settlor himself acts as trustee, which may change the uses of the trust.

Estate Planning

A revocable trust generally becomes irrevocable when the settlor dies or becomes mentally incapacitated for a period of time. Therefore, many people use the trust for estate planning purposes, as an alternative to or in conjunction with a will. However, since a settlor creates her trust during his lifetime, it typically need not go through the time and expense of probate.

Asset Protection

A revocable trust may be useful to protect assets from creditors. Many jurisdictions do not allow asset protection when the settlor retains control of the trust during life (for instance, by acting as a trustee). However, some jurisdictions find that once the settlor dies and the trust becomes irrevocable, creditors can no longer reach the assets.

References

• "Wills, Trusts and Estates (Seventh Edition)"; Jesse Dukeminier, Robert H. Sitkoff, James M. Lindgren and Stanley M. Johanson; 2005
• U.S. Legal: Spendthrift Trust Law & Legal Definition
• The Money Alert: Revocable vs. Irrevocable Trusts

Resources

• DIY Estate Planning: Revocable Living Trusts