What is a revocable trust?
Revocable trusts are an alternative to building a will. Assets are transferred into the trust and held while the owner of the assets is alive. If the trust is held by a couple, they are the owners and trustees of the assets. If one of them dies, the assets are under the sole control of the surviving trustee. Assets include both monetary and physical property.
What makes it revocable is that the trustees hold the power over the trust and its governing documents while they are still alive.
Survivorship and sucession: Who gets what?
Revocable trusts determine the succession of assets with a document that determines the hierarchy who assumes power over the trust. The primary advantage of a revocable trust is that, unlike a will, it cannot be contested in court. Changes to trust documents must be approved by trustees. Wills can be changed on a whim and are typically not as thorough as a trust.
One of the biggest advantages of a trust is that the estate avoids probate. Probate proceedings are typically expensive and protracted affairs, especially if the estate has holdings in multiple states. The trust simply passes the assets to the beneficiary, per the specifications of the trust.
Setting up a trust
Trusts can be set up with documents purchased online or at a bookstore, however it is recommended that the estate's owners meet with a lawyer. The owner of the assets, called the settlor, selects the trustees who control the estate. The settlor and trustee can be the same person. The document must clearly state who those people are and who the direct beneficiaries of the trust are.