Revocable trusts are also called living trusts or inter vivos trusts.
A person can set up a revocable trust during the person’s lifetime and transfer properly into the trust. Usually the person is the trustee of the trust during the person’s lifetime, and then another person takes over as trustee when the person dies.
Some people set up a revocable trust to avoid probate. If property is transferred into a revocable trust during a person’s lifetime, the person will not own the property at the time of the person’s death, so it will not be necessary to probate the person’s estate to distribute his/her property. The revocable trust would set forth a plan for distributing a person’s property upon the person’s death.
Since a person maintains control over the property during his/her lifetime, there is no favorable tax benefits associated with a revocable trust. Also, distributing assets to a revocable trust does not increase a person’s chance to be eligible for medical assistance payments in the event the person must move into a nursing home.
A person can prepare a will which leaves his/her estate to a revocable trust. A will should be coordinated with the revocable trust so that property is distributed in the same manner upon the person’s death. One advantage of a revocable trust is that a back-up trustee will be in place to administer a person’s assets in the event the person becomes incapacitated.